Bank stocks fell in a flat market Thursday, despite the solid first- quarter earnings reported by a host of banks, including J.P. Morgan & Co. and Bank of New York Corp.

The Standard & Poor's bank index dropped 0.72%, and the Dow Jones Industrial Average gained 0.02% in a turbulent day of trading.

Judah Kraushaar, a bank analyst at Merrill Lynch, said that banks stocks are fighting "an uphill battle," with rapidly changing investor perceptions of the economy and of the direction of interest rates.

"Investors are more focused on valuation and relative earnings momentum going forward," Mr. Kraushaar said.

"We still have a very unsettled market overall," said Frank Barkocy, a bank analyst at Josephthal Lyon & Ross Inc. "The market is still waiting for the consumer price index, which is coming out tomorrow."

Barnett Banks, which was upgraded by Morgan Stanley to "outperform" from "neutral," was one of the few gainers on the day, rising $1.25 to $60.25.

Analyst Dennis Shea set a 12-month target price of $70 on Barnett stock, and raised his 1996 earnings estimate to $5.85 from $5.60, and his 1997 estimate to $6.30 from $6.05.

"We are encouraged by an ongoing shift in management's focus from gaining deposit market share to boosting profitability and earnings per share growth," Mr. Shea said.

"The company continues to fund loan growth with the run-off in the residential mortgage portfolio, which has a powerful effect on the net interest margin and subsequently, profitability," the Morgan Stanley analyst said.

Mr. Barkocy, the former Advest analyst who joined Josephthal in April, initiated coverage of Bank of Boston Corp., National City Corp., and Norwest Corp. with "buy" ratings.

"My feeling was that Bank of Boston, National Citym and Norwest are all going to report some pretty solid earnings next week, and their longer-term fundamental prospects continue to look exciting," Mr. Barkocy said.

The Bay Banks merger with the Bank of Boston and the Integra merger with National City could "accelerate earnings in 1997."

The Bank of Boston's stock fell $1.625 to close at $46.125; National City dropped $1 to $33.875 and Norwest fell 62.5 cents to close at $35.

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