Bank stocks enjoyed big gains Monday in the wake of government measures aimed at stimulating lending.

Investors appeared to anticipate a rush of new loans and further gains from bond trading following the Federal Reserve Board's cut in the discount rate and the drop in the fed funds rate on Friday.

J.P. Morgan & Co., KeyCorp, and Wells Fargo & Co. all gained more than $3 on Monday, helped by a Dow that rose 88.10, to 3,022.59 on the strength of program trades and yearend portfolio positioning.

Morgan Reaches a High

Late in the day, Morgan shares rose $3.125, to $66.625, its high for 1991. Morgan was the first big bank to answer the Fed's action on Friday, slicing its prime rate by 1 percentage point, to 6.5%.

Society and Bankers Trust gained more than $2, and a handful of banks, including Bank of New York, Mellon Bank and C&S/Sovran, which soon followed suit on their prime rates, all climbed more than $1 a share.

Some experts warned, however, that the upticks were temporary because they fail to reflect banks' underlying weaknesses.

Not Quite Good Enough

"This rate cut improves prospects for the economy, but not enough to make us bullish on bank stocks," said Michael Flamant, senior vice president with Wrights Investor Service in Bridgeport, Conn. "We have a fundamental fear of the risks that are out there in the way of further loan losses and problems with real estate."

Indeed, investors have not bid up banks stocks after the past three small rate cuts for that reason, say analysts.

If the latest rate cut spurs an economic comeback, banks will benefit six to nine months from now because borrowers will return. And until then, banks with big investment portfolios may be able to make money on trading.

Fears of a Double Dip

On the other hand, if the economy needs such a big shot in the arm, it is in bad shape.

"The fact that the economy is stalled makes investors concerned with a double dip because nonperforming assets could rise again," said George Salem, an analyst with Prudential Securities.

A lower prime rate may reduce profitability in the long run.

Initially, the lower cost of funds for banks can increase net interest margins, which could help earnings. But banks cannot automatically cut interest rates on deposits, or those deposits may find refuge in money markets.

"Six months from now, margins may be lower than they are today," said Mark Alpert, an analyst with Bear, Stearns. "But the stocks may have a higher price-to-earnings multiple and we may see more loan demand."

Impact Not Severe

One curious note about big gains is that two of the biggest winners were J.P. Morgan and Bankers Trust. These two banks are probably less affected by loan-rate cuts than the rest of the industry, because they have a smaller percentage of assets in loans than other major banks.

Monday brought a flurry of rate cuts by units of NCNB Corp., First Fidelity Bancorp, Mellon Bank Corp., Bank of Boston, and Wells Fargo & Co.

Wells' cut helped the stock jump $2.25, to $56.25. Some investors use Wells' stock as a proxy for the bank industry, indicating some degree of confidence overall.

Splitting the Difference

Not all banks, however, have matched the Fed's move. NBD Bancorp, for example, announced a half percentage point rate cut ot 7%.

"We felt 7% was adequate for now," said a spokesman for NBD. "We will watch conditions and if it is merit, we will reduce the rate further." Local rival Comerica took the same step Monday. First City Texas in Houston cut the rate to 6.75%.

Banc One Corp.'s lead bank cut its rate on Friday, but only to 6.75%, saying the Fed's intentions were not clear. After consideration over the weekend, the bank dropped the rate another quarter of a point on Monday morning.

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