Bank stocks rose Thursday as investors continued to snatch up bargains on a day they were encouraged by how the government would conduct its stress tests on banks and the possibility of a third round of bailouts for banks.

The KBW Bank Index rose 4.83%, "but take a picture because it won't last long," said Joseph C. Morrissey, a managing director of bank and thrift stocks at Boenning & Scattergood Inc. in West Conshohocken, Pa. "We're still in an oversold condition, and it's a bear market rally. There's still a lot of heavy lifting to do."

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