Bank stocks rose sharply Friday after the government reported solid growth in jobs and low inflation.

Conditions are "ideal for the market over all and bank stocks in particular," said Frank J. Barkocy, a banking industry analyst at Josephthal & Co. in New York.

Though the Labor Department reported a 275,000 gain in jobs, suggesting a robust economy, it also reported that hourly wages rose a mere penny. Investors concluded that would persuade Federal Reserve policymakers not to raise rates when they meet March 30.

After lagging behind the overall market's pace for many weeks, banks and financial stocks shared some of the market's momentum. The Standard & Poor's bank index was up 2.15%, while Nasdaq-traded banks were up 1.20%. The S&P 500 stock index gained 2.84%, and the blue-chip Dow Jones industrial average advanced 2.31% to a record close of 9,736.08.

Among major banks, Citigroup gained $1.4375, to $61.75; Chase Manhattan Corp. $3.50, to $86.875; and J.P. Morgan & Co. $1.625, to $114.5625.

Among thrifts, Dime Bancorp was up 87.5 cents, at $26, and Washington Mutual 50 cents, at $42.875.

The news was seen as a turning point after February, when the bond market posted its worst performance since 1994, while the Fed was steadily raising interest rates.

Interest rates fell on the news, easing investor fears about prospects for bank earnings growth this year.

"It was a jobs report that even a bond trader could love," said Kenneth Mayland, chief economist at KeyCorp, Cleveland. "There was something in it for everyone."

The government also reported that the nation's unemployment rate, which is derived from different data, ticked up to 4.4% in February, from a three-decade low of 4.3% in December and January.

Some economists and analysts have been anticipating a turning point in interest rates that would signal a better environment for bank issues, which tend to reflect bond market trends.

In a pattern not fully understood on Wall Street, bond yields have long tended to rise in the first three or four months of each calendar year and then fall back as the year progresses.

"We're optimistic that the bond market will rally in the second quarter and that should help the banks," said Lawrence W. Cohn, research director at Ryan, Beck & Co., Livingston, N.J. "Yields have tended to back up 50 to 60 basis points in the first quarter of a year, then change direction, and we think that will be the case again."

"The run-up in rates should burn itself out," said Nicholas S. Perna, chief economist at Fleet Financial Group, Boston. He expects yields on the Treasury's benchmark 30-year bond "back below 5% by the second half of this year," depending on the economy's momentum.

Edward Yardeni, chief economist at Deutsche Bank Securities, New York, said the bond market tendency of higher yields early in the year, reversing later, can be charted back 15 years. He labeled the bond market annual winter sag "seasonal bad humor."

In the 1980s and early 1990s, the pattern may have been attributable to the February release of the President's fiscal budget report, he said. That tended to feed concerns about the federal budget deficit.

Another possible explanation during the long disinflationary era since the early 1980s is that investors and traders have typically started every year anticipating a revival of inflation and then changed their minds as the year progressed, he said.

That may explain why bond yields and interest rates have tended to fall most dramatically during the fourth quarter of each year.

As for the central bank, it will likely remain on hold where rates are concerned, according to economist William Sharp of Chase Securities Inc. "We believe the Fed will continue to maintain a steady policy in the near term," he said, "especially since upcoming inflation reports are likely to remain benign."

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