Financial stocks, buoyed by favorable economic news and passage of the financial reform bill in the Senate, finished last week on a good note, continuing their climb from their mid-October depths.

For the week the American Banker index of 225 U.S. banks finished up 1.8%, including a 1% gain Friday. Bank stocks were aided by passage Thursday night of the financial reform bill, which President Clinton is expected to sign into law.

All stocks were helped by news Friday that wages rose less than anticipated by economists. Workers' hourly wages rose in October by a penny, or 0.1%, to $13.37, according to a U.S. Labor Department report. The modest increase allowed investors to treat lightly another report, which said the U.S. jobless rate dropped to a 30-year-low of 4.1% last month.

The trove of good news sent stocks flying in morning trading, with the Dow Jones Industrial Average soaring 175 points in five minutes. When the market opened Friday, bank stocks, which had traded last week beneath the previous week's high, quickly surged to levels not seen since Bank One Corp. announced in August that it would not meet its 1999 earnings estimates. At the time, that news gave investors another reason to shed bank stocks in a rising interest rate environment.

But with recent benign economic data on inflation, the markets are shifting their thinking, betting the Federal Reserve will not raise interest rates on Nov. 16.

"With the interest rate scenario, the fears have been relieved on the part of investors," said Adam Lewis, vice president and trader at Keefe, Bruyette & Woods Inc. in New York.

With Friday's run, some financial stocks had heady gains for the week, especially the brokerages. Among Internet stocks, E-Trade Group rose 33%, Telebanc Financial 32%, DLJ Direct 28%.

Meanwhile, traditional brokerages neared all-time highs on Friday, with Goldman Sachs Group up $3.5625, or 5.1%, to $73.6875; Lehman Brothers $1.75, or 2.4%, to $75.75; and Morgan Stanley Dean Witter $2.625, or 2.3%, to $115.8125.

Other big gainers for the week once again were stocks of insurance companies, many which are expected to be bought by banks once the financial reform bill becomes law. For example, Reliastar Financial rose 9.3%, and Chubb Corp. 10.5% for the week.

The ebullience for stocks helped Citigroup sustain two large block trades on Thursday totaling 31.7 million shares, about $1.7 billion.

Wall Street observers speculated that either Saudi Arabian Prince Alwaleed bin Talal bin Abdulaziz Al Saud or Warren Buffet's Berkshire Hathaway Inc. were the sellers.

The shares were bought by Salomon Smith Barney & Co., a Citigroup subsidiary, and were either quickly sold to other buyers or perhaps sold back to Citigroup, which has authorization to purchase shares through a buyback program.

"You might argue that it is quite a plus that that many shares could move without affecting the stock price," said Stephen Berman, a buyside analyst at Stein Roe & Farnham Inc., New York. Despite the trades, Citigroup's stock closed Thursday at $54.75, up 3.3%.

Yet on Friday Citigroup's stock lagged other financial companies', closing down 56.25 cents, or 1%, at $54.1875.

"I don't think people should make much of the block trades," said Bill Rubin, a portfolio manager at Keefe Managers Inc. "They occur frequently and obviously a large buyer thinks the stock is going higher and a large seller thinks the opposite. The simple answer would be the stock has been red-hot lately and some people are taking some chips off the table."

Mr. Berman said Prince Alwaleed's pattern of buying distressed companies and selling after they have recovered makes a case for his exit.

Tania Padgett contributed to this story.

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