Financial markets were mixed on Tuesday as most banking stocks recovered at least partially from their recent downturn.

Mellon Financial Corp. was among the gainers. Lori B. Applebaum, an analyst at Goldman, Sachs & Co., initiated coverage of Mellon on Tuesday with a "market outperform" rating. Fifth Third Bancorp got mixed reviews a day after it announced an agreement to buy Old Kent Financial Corp.

Ms. Applebaum's rating of Mellon added to a generally positive Wall Street outlook for the Pittsburgh company, which has been praised by analysts as it shifts its focus from banking to investment management.

The company trades at a high price-earnings multiple relative to banking peers, but most analysts say it deserves the premium.

Mellon gets credit for its high degree of diversification, said Ms. Applebaum. She gave the company's stock a target price-earnings multiple of 20, which is near its current level, and a target share price of $48.

The stock rose $1.5625 Tuesday, or 3.62%, to close at $44.75.

Mellon currently holds a 1.4 rating on the First Call/Thomson Financial analyst consensus scale (in which 1 equals "strong buy" and 5 "sell"). Only one of the analysts has given the stock a "neutral" grade - Ruchi Madan of Salomon Smith Barney, who initiated her coverage Oct. 5 and said she considered Mellon "fairly valued" when its stock was trading at just over $46.

Ms. Applebaum wrote in a research note that she expects Mellon's overall revenue to grow 13% to 14% next year and earnings from its custody and asset management division 15% to 20%. This division "will likely contribute 60% of results by 2001," she wrote. She expects per-share earnings of $2.03 this year and $2.28 next year.

She also reiterated her "buy" rating for Fifth Third, as did Catherine Murray of J.P. Morgan & Co.

Timothy Willi of A.G. Edwards & Sons Inc. kept his lukewarm "maintain" rating for the company, and Jon Balkind of Fox-Pitt, Kelton Inc. downgraded Fifth Third to "hold" from "attractive."

The American Banker index of 225 banks was up 1.35%, and the index of the top 50 rose 1.29%.

Banking companies in the Dow Jones industrial average dropped. Morgan lost 62.5 cents a share, or 0.44%, to $141.4375, and Citigroup Inc. 12.5 cents, or 0.51%, to $49.125. The Dow climbed 0.3%.

Elsewhere in the market, some investment banks were on the losing side, including Bear Stearns Cos., which lost $1, or 1.93%, to $50.75. However, Goldman Sachs rose $1.1875, or 1.43%, to $84.1875, and Lehman Brothers Inc. $3.6875, or 7.45%, to $53.1875 despite reduced earnings forecasts by Dean Eberling, an analyst at Keefe, Bruyette & Woods Inc.

Mr. Eberling cut his quarterly earnings target for Bear Stearns by 10 cents, to $1.15; Goldman by 16 cents, to $1.55; and Lehman by 13 cents, to $1.40. All three reductions were prompted by weaker investment banking activity, less underwriting, and slow trading, he wrote in a research note.

Lauren Smith, another Keefe Bruyette analyst, reduced her earnings target for A.G. Edwards by 10 cents, to 95 cents; the St. Louis investment bank's stock rose 18.75 cents, or 0.39%, to $48.125.

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