Bank stocks rose as interest rate stability prevailed over potential fallout from the scuttling of Bank of New York Co.'s megamerger proposal for Mellon Bank Corp.

"You're getting a healthy bounce" from Tuesday's decision by the Federal Reserve to leave interest rates alone, said Lawrence W. Cohn, research director at Ryan, Beck & Co., Livingston, N.J.

"It's like a big sigh of relief by investors," Mr. Cohn said.

Traders were a bit anxious before the opening bell, concerned about how the market would react to Bank of New York's decision to rescind its unsolicited offer for Mellon.

The news lifted Bank of New York $1.50 a share, to $61.50, and dropped Mellon $2, to $68, as investors betting on a deal fled.

For the most part, investors shrugged off any broad effect.

"I don't see it as a negative for the banking industry in general," said Ross A. Demmerle, a banking analyst at McDonald & Co. Investments.

Among the gainers were BankAmerica Corp., up $2.1875, to $85.4375; Bankers Trust Corp., $2.50, to $130.4375; Citicorp, $3, to $158.50; and J.P. Morgan & Co., $2.125, to $131.8125.

The Standard & Poor's bank index rose 1.40%, and the Dow Jones industrial average was up 1.29%. The Nasdaq bank index gained 0.82%, and the S&P 500 rose 0.86%.

"Consolidation will continue," Mr. Demmerle said. "You just need the right marriage."

The market is certainly primed. Three megadeals remain out there- Citicorp and Travelers Group, BankAmerica Corp. and NationsBank Corp., and Banc One Corp. and First Chicago NBD Corp.

At the same time, banking companies like First Union Corp., Fleet Financial Group, and Wells Fargo & Co. are widely seen as buyers or sellers in coming months.

Bank of New York stock appears likely to keep rising and will reach $80 within 12 months, Mr. Cohn said. "The fundamentals there are quite good," he said. "We expect it to be a strong stock with solid upside."

But Mellon stock "will be in limbo now," Mr. Cohn said. "I don't expect to see it do much of anything between now and yearend," when Mellon chairman and merger opponent Frank V. Cahouet retires.

At that time, many analysts expect Bank of New York to reapproach Mellon. But the effect on Mellon's stock is uncertain.

"It could turn into a proxy battle where Bank of New York won't be willing" to offer a premium to shareholders, one analyst said.

Or a win-win situation could develop for those who stood by Mellon.

Shareholders will triumph either way, said Gerard S. Cassidy, a banking analyst at Tucker Anthony. "Mellon will deliver, or a gun will be put to management's head to find a deal."

Brokerage stocks also had a strong day, propelled in part by talk that they were being seriously eyed by banking companies.

Bear, Stearns & Co. rose $3.0625, to $55.7375, on reports that Dutch banking giant ABN Amro is close to making an offer.

Also, Merrill Lynch & Co. gained $5.0625, to $92.8125, and PaineWebber Group was up $2.3125, to $44.50.

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