Bank stocks are among the best bets in the market today, according to Salomon Smith Barney.

In urging clients late last week to overweight their portfolios with shares of financial institutions, Salomon's market researchers said the group is positioned to excel in 1999.

Rising loan growth, continued interest rate easing by the Federal Reserve, a rebound in the equity market, and further consolidation of the banking industry will drive bank share prices higher, said A. Marshall Acuff, senior investment strategist with Salomon.

Many financial institution stocks "are trading near their relative lows on a multiyear basis, despite improving fundamentals," Mr. Acuff said.

Charter One Financial, Chase Manhattan Corp., First Tennessee, and National City Corp. are the strategists' top picks and were added to the firm's "recommended" list.

"Making smart, accretive acquisitions is one of Charter One Financial's core competencies," said Salomon researcher John MacNeil. Salomon expects Charter One to report a record 16% growth in the fourth quarter.

Chase Manhattan "is a leader in virtually every segment in which it competes," including global cash management, trading, private banking, global custody, currency clearing, and corporate trust, said Mr. MacNeil.

With a price/earnings ratio that remains at 1995's level, shares remain appealing, Mr. MacNeil said.

First Tennessee shares "should trade in line with other high-quality regional banks because of its high return on equity and balanced business mix," Mr. MacNeil said.

National City shares, which fell 12.5 cents, to $67.625 on Friday, could trade up to $90 a share, or 19 times its estimated 1999 earnings per share of $4.75, Salomon said.

With a 29% upside potential and a 2.8% yield, National City represents "an attractive total return vehicle," Mr. MacNeil said.

On Friday stocks continued the week's downward trek but recovered slightly in late trading. The Standard & Poor's bank index fell 1.39%, and the Dow Jones industrial average was off 0.22%.

The Nasdaq bank index shed 0.42%, and the S&P 500 edged up 0.12%.

Starting today, the Nasdaq bank index has more than doubled the number of companies on its roster, to 732 from 356.

The bank index now contains virtually every bank, banking company, and savings institution that trades through Nasdaq.

Until now, most of these companies were included in the Nasdaq's "other finance" index, a catchall for many types of financial services firms.

The revamping of the indexes provides a "truer representation of the banking industry," a Nasdaq spokesman said.

Those shifting to the bank index include Fifth Third Bancorp, Huntington Bancshares, Regions Financial, Riggs National, and Northern Trust Corp.

The Nasdaq's other finance index will now be confined to financial service firms such as brokerages, mortgage lenders, and real estate investment trusts, the spokesman said.

Shares of Firstar Corp. rose nearly $3 in early trading, continuing a rise that began last week on favorable analyst comments and pending inclusion in the S&P 500.

Firstar, formerly Star Banc, is replacing Amoco Corp., which was bought by British Petroleum Co.

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