Bank stocks rallied Tuesday, boosted for a second day by solid earnings reports from several banks.

American Banker's index of 50 banks rose 0.79%, and its index of 225 banks was up 1.03%. Gainers included Bank One Corp., up $1, or 3.13%, to $32.9375; PNC Financial Services Group, up $1.25, or 2.75%, to $46.75; and Firstar Corp., up $1.625, or 6.91%, to $25.125.

Firstar, of Milwaukee, was among the banks reporting earnings, along with Southern regionals SunTrust Banks Inc. of Atlanta and BB&T Corp. of Winston-Salem, N.C. BlackRock, the investment unit of PNC Financial Services Group, also reported quarterly results.

Firstar's strong earnings report was coupled with the announcement that it would buy back 100 million shares, or 10% of its stock, over the next two years.

Lori Appelbaum, an analyst at Goldman, Sachs & Co., said Firstar's earnings were strong because of Mercantile Bancorp, which it bought in September. "Momentum is beginning to improve at the company in terms of revenue and deposit trends," she said.

SunTrust's and BB&T's net income rose because of strong loan growth and cost cutting. Shares of SunTrust fell 6.25 cents, or 0.11%, to $57.3125. BB&T lost 18.75 cents, or 0.67%, to close at $28.

"Bank stocks are up on more favorable earnings," said Christopher Blum, a bank analyst with Edward Jones in Chicago. "Interest rate jitters are on the side, at least for the day."

Joan Goodman, an analyst at the Pershing division of Donaldson, Lufkin & Jenrette, agreed. "Investors are enthusiastic about bank stocks," she said. "They don't expect to see anything too negative. The consumer is still driving the market. That is helping the banks because they are borrowing and spending."

Richard Bove, an analyst at Raymond James & Associates in St. Petersburg, Fla., said he was not surprised that bank stocks were making gains.

Mr. Bove, who in February changed his bearish stance on the group to a bullish one, said bank stocks will bounce back because they are trading at a substantial discount and their business operations are fairly solid.

He said the market has overreacted to the margin compression that some banks are suffering.

"The expectation that the banks will do poorly is already in their stock prices, but the reality is that banks will not do that poorly," said Mr. Bove. The bottom line is that "we are in a situation where loan losses are up a little, net interest margins are down, and earnings are relatively flat."

In other words, he said, "investors should be buying bank stocks hand-over-fist."

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