Hopes of more cost-saving consolidations kept the shine on bank bonds yesterday, but many players viewed the merger-inspired rally as an opportunity to bow out of the banking sector.

Led by Chemical Banking Corp. and Manufacturers Hanover Corp., whose planned merger sparked a broad run-up in the bank sector Monday, bank issues outpaced Treasuries with gains of as much as 1/2 point. Other high-grade corporates marked time through a quiet session, while junk bond issues advanced 1/4 point.

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