Bank stock prices were mixed Wednesday after the sharp decline on Tuesday - raising fears that the long rally is losing steam.

Wells Fargo & Co. and J.P. Morgan & Co. showed the day's strongest rebounds.

Morgan was up $1 to $56 after a $1.75 decline the day before, and Wells was up to 75 cents to $81.375 after a $3.375 decline Tuesday.

Cleveland-based Society Corp. rose $1.25 at the opening bell, but fell back to $58, a gain of only 25 cents for the day. On Tuesday, Society shares fell $1.75.

Investors recognized that Society was unfairly hurt in the general selloff Tuesday, said Henry C. Dickson of Kemper Securities Group Inc.

The sellof Tuesday - in which bank stocks underperformed a declining overall stock market - was sparked by report in USA Today and The Wall Street Journal warning about problem loans in California and further real estate losses for banks nationally.

The articles brought to the fore investor fears that the long rally in bank stocks may be lossing steam. And some analysts said a short correction may be in the offing.

'A Holding Pattern'

"In the absence of loan demand volume or positive earnings surprises, we're kind of in a holding pattern," Nancy Bush, analyst at Brown Brothers, Harriman & Co., said.

More bad news might trigger a correction, she said.

However, several bank stock analysts believe bank stocks can rise further.

"I keep thinking that it's too good to last," said Richard Stillinger of Keefe, Bruyette & Woods Inc. But, he said, "if the economy improves and the overall stock market does okay, the bank stocks would continue to benefit."

But Livia Asher of Merrill Lynch & Co. said her firm is advising greater selectivity.

Merrill's "emphasis list" includes only five banks: Bank-America Corp., Bankers Trust New York Corp., Fleet Financial Group, Mellon Bank Corp., and State Street Boston Corp.

State Street posted its second straight gain Wednesday, rising $1.375 to a new 52-week high of $36.375.

For the most part, bank stocks followed the up-and-down pattern of the overall market on Wednesday. The Dow Jones industrial average closed the day at 3,370.44. It had erased 20 points of Tuesday's 22.56-point decline by midday before falling back.

Most big bank stocks showed fractional gains on the day.

Bank of America, which lost 87.5 cents Tuesday, was unchanged at $46.50. PNC Financial Corp. lost another 25 cents to $50.875 after losing $1.25 Tuesday.

But Midlantic Corp., which lost 8.2% in value Tuesday, regained 25 cents to $12.875.

Another bank stock that did well both Tuesday and Wednesday was Marshall & Ilsley Corp., Milwaukee. The stock shot up $3 to $61.65 Wednesday, following a 25 cent gain Tuesday, amid rumors that Harris Bank Corp., a unit of Bank of Montreal, was mulling a takeover bid.

Analyst Richard Strauss of Salomon Brothers said Marshall & Ilsley has an attractive data-processing business.

'Buy' Signal for Shawmut

Trading in Shawmut National Corp. was heavy, with 612,000 shares changing hands. The volume was attributed to an emphatic "buy" recommendation by Donaldson, Lufkin & Jenrette Securities Corp.

Frank R. DeSantis, a Donaldson Lufkin analyst, said Shawmut "got whacked" in Tuesday's selloff, when it fell 50 cents. This created a buying opportunity, he said.

Despite heavy volume, Shawmut gained 37.5 cents to $16.75.

Mr. DeSantis predicted the rally will continue, especially for banks such as Shawmut that are recovering from loan problems.

"What we see now is just the first step," he said.

Banks that have reported declines in new nonperforming loans will soon begin to draw down reserves, he predicted.

This would add to earnings power and drive stock prices higher during the next six quarters, Mr. DeSantis said.

Similar thinking already is prevailing for thrift stocks in New England, said Gary Gordon, analyst for PaineWebber Inc.

Boston's Neworld Savings has risen from the $2 range one and a half years ago, to $13.75 Wednesday, he said. Bank-Worcester, at $13.75, is one of a number of New England thrifts trading at 52-week highs.

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