Turbulence in the foreign exchange markets is making it especially difficult this quarter to project earnings at the big New York trading banks, analysts said.

That's particularly the case with J.P. Morgan & Co. and

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Bankers Trust New York Corp., where trading revenues account for a larger share of total revenue than at the other money-center banks, according to analysts.

"The volatility over the last week or two means that anyone's earnings estimates for the third quarter are really pretty much out the window," said Raphael Soifer of Brown Brothers Harriman & Co.

High interest rates in Germany have wreaked havoc in the world's currency markets. The situation reached a crisis level this week when a smaller-than-expected rate cut by Germany's central bank failed to ease pressure on other European currencies.

In one dramatic effect, Britain dropped out of the European exchange rate machanism rather than continue raising interest rates to stay within the system. Another effect is that the dollar, which had been trading at post-World War II lows, has risen in recent days as investors seek safe havens for their funds.

Exception to the Rule?

Market volatility usually helps banks' trading profits, but the recent, extraordinary activity in the currency markets might be "too much of a good thing," Mr. Soifer said.

In this type of environment, trading banks might just as easily wind up with big losses as big gains, analysts said.

Given that uncertainty, investors in these bank stocks have been pretty much sitting on the sidelines recently.

Ordinarily, the stocks of these trading banks would be expected to benefit from volatility in the currency markets, based on the assumption that it would translate into higher trading profits. Not so this time.

"When markets get whip-sawed around a lot from day to day, that doesn't necessarily mean that's a good trading environment," said Arthur Soter, bank analyst at Morgan Stanley & Co.

The volatility in the currency markets also comes at the tail end of the quarter, leaving analysts little time to assess the impact on banks' trading results before they release earnings estimates.

For now, Mr. Soifer said he is basically advising investors to sit on their hands until the quarterly numbers come out.

Salomon Brothers analyst John Leonard said he is inclined to raise his estimates if banks' third-quarter trading profits as a result of the recent currency volatility.

|Risk of Getting Caught'

At the same time, though, he said it's "anybody's guess" as to how well positioned the trading banks were in this environment. "There's always the risk of getting caught," he said, echoing the view of the other analysts.

Another analyst, who asked not to be identified, said he had a "generic" concern about possible big trading losses but didn't single out any bank.

Even if one or more banks suffered a big trading loss that would materially affect third-quarter earnings, it might not be disclosed right away, if at all.

The bank in question probably would try to work itself out of the position and mitigate the

V loss before the quarter ends, analysts said.

Little Effect on Stocks

James J. McDermott Jr., president of Keefe, Bruyette &

Woods Inc. said he is more

V inclined to believe that trading banks will profit from the upheaval. "Intuitively, you sense this is opportunistic," he said.

At the close of trading Thursday, Morgan was unchanged at $60.125 a share; Bankers Trust was up 37.5 cents, to $63.25; Chase Manhattan Corp. was unchanged at $22.625; and Citicorp was up 25 cents, to $16.

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