Bank stocks fell with the rest of the market Thursday, as bond prices collapsed and interest rates rose.

"It's a pretty ugly day for bank stocks in general," said Thomas D. McCandless of PaineWebber Inc.

The Dow Jones industrial average fell 33.23 points to 3,668.31.

Long Bond Falls Two Points

Bond prices, which had stabilized last week, failed to rise on weaker than expected news on first-quarter economic growth. The market fell into disarray after a poorly received auction of five-year Treasury notes.

The price of the benchmark 30-year bond fell nearly two points and the yield rose to 7.26%.

Analysts said bank stocks were not hurt nearly as badly but only a handful of issues gained ground.

Shares in Norwest Corp., Firstar Corp., and Signet Banking Corp. all fell $1 or more in price, before recovering some lost ground in afternoon trading.

A Costly Perception?

Analysts attributed the declines at Norwest and Firstar to large sales by institutional investors that were unrelated to the fundamental strengths of the two midwestern companies.

Signet, they said, may have been hurt by the perception that its big credit card business, which accounts for most of its profits, is especially sensitive to rising rates.

"At the last conference call, the chief financial officer indicated that with rising rates, people raising earnings estimates and already at high end of the range, should hold back," said Mr. McCandless, whose own estimates are at the high end of the spectrum of analysts' expectations.

Simple Solution Seen

The Richmond, Va., banks has relied on low finance charges to attract card accounts. And analysts had expressed concern that rising rates could have an impact on Signet's profit margin and its ability to retain accounts.

Mr. McCandless argued, however, that it will be a simple enough for Signet to protect it s margin. "All they have to do is change the price on the cards," he said. "It's going to hit all the banks," he added. "How bad it hits each one is a matter of how well they hedge" against short-term changes in rates.

Signet finished the day at 40.625, off 75 cents. Norwest fell 50 cents to 25.25. Firstar fell 75 cents to $34.125.

Among other big banks, BankAmerica Corp. gained 37.5 cents to $4.375, SunTrust Banks Inc. gained $1 to $45., and Northern Trust Corp. fell $1.50 to $41.75.

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