Financial stocks recovered from their choppy post-election downturn on Thursday, and analysts and traders said that a positive economic outlook and stable interest rates could soon create positive momentum for bank shares.

Financials fell briefly with the Dow Jones industrial average and the Standard & Poor’s 500 index Thursday afternoon as evidence was mounting that the race for the presidency could transform into a protracted legal battle. Still, American Banker’s index of 225 banks closed up 0.8%, and its index of the top 50 banks 0.66%. The Nasdaq composite lost 0.97%, the Dow 0.67% and the S&P 500 0.65%. Bear Stearns Cos. got a lift on rumors that Lehman Brothers Holding Inc. was mulling a bid to take it over. Bear Stearns stock rose $1.50, or 2.64%, to $58.3125. Lehman lost $3.0625, or 5.3%, to $54.6875.

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