First Interstate Leads a Run-Up in Bank Stocks : Finance: The Los Angeles company’s shares leap 16.2%. Rumors are circulating that big rivals want to buy it.

First Interstate Bancorp’s stock price soared Monday amid rumors that the company is ripe for takeover in the wake of last week’s retirement of longtime chief executive Joseph J. Pinola.

The Los Angeles-based banking firm’s shares rose $6.25 to $44.875, making it one of the biggest percentage gainers on the New York Stock Exchange.

The 16.2% increase in First Interstate’s shares led a rally in stocks of many of the nation’s biggest banks and thrifts. Other bank and thrift stocks rose between 1% and 7%.

A First Interstate spokesman said “there are no corporate developments that could account” for the price gain. There is persistent speculation that the company is being courted by any or all of its big California rivals--Los Angeles-based Security Pacific Corp., BankAmerica Corp. of San Francisco and San Francisco-based Wells Fargo & Co.

“There’s a rumor that Wells Fargo would be interested in taking it over,” said Frank DeSantis, banking analyst with Paine Webber & Co. in New York. “Given Wells Fargo’s philosophy, it would have to be a friendly deal.”

Other analysts noted that Security Pacific and Bank of America have expressed interest in buying First Interstate, which has been plagued with loan losses during the past three years.

First Interstate was determined to remain independent while under Pinola, its aggressive former chief executive. But analysts view Edward M. Carson, the new chief executive, as possibly more receptive to takeover offers.

All four banks refused to comment on the speculation, citing corporate policies that barred them from discussing rumors.

While the surge in First Interstate shares was the most spectacular, financial stocks in general turned in impressive performances Monday as the Dow Jones industrial index broke another record, closing at 2,935.19, up 34.22.

Stocks of 15 of the nation’s largest banks and thrifts showed gains. At the bottom end of the range was Chemical Banking Corp. in New York, with a gain of 1.3%. Great Western Financial Corp., Beverly Hills parent of Great Western Bank, rose 6.6%; Coast Savings Financial, a Los Angeles-based thrift company, was up 4.9%; Los Angeles-based Security Pacific rose 4.6%; Wells Fargo gained 4.5%, and BankAmerica was up 4%.

One impetus for Monday’s rally was employment data released Friday that signaled sluggish growth in the economy. Analysts say slow growth may prompt the Federal Reserve to lower interest rates, a positive force on the stock market.

Interest-sensitive companies are set to benefit even more because they were heavily “oversold” earlier this year when interest rates seemed to be heading higher, DeSantis said.

The market also had been concerned about prospects for a recession, which could leave banks and thrifts with soaring loan losses as borrowers find themselves unable to make payments on time. Many analysts believe that paring interest rates now would benefit the economy over the long haul, spurring business for banks and savings and loans and forestalling loan losses.

Not everyone believes the picture for the financial industry is rosy, however.

“The prospects for the banking group as a whole are lackluster to dim,” said Stephen Berman, analyst with County NatWest Securities in New York. “Problem loans are continuing to rise at a rapid pace and don’t look like they will be peaking any time soon. Revenues are unusually weak.”

Berman said a lower prime rate also hurts banks in the short run, as they receive less interest from corporate borrowers but are unable to cut rates paid to savers as quickly.

STOCKS GAIN: The Dow soared to another record high, rising 34.22 to 2,935.19. D4

BANK AND THRIFT STOCKS RALLY

Stocks are ranked by percentage change

Company Mon. close Change % change First Interstate $44.875 +6.25 +16.2% Great Western Financial 20.25 +1.25 +6.6 Coast Savings Financial 8.00 +0.375 +4.9 Security Pacific 42.25 +1.875 +4.6 Wells Fargo 84.50 +3.625 +4.5 BankAmerica 32.625 +1.25 +4.0 CalFed 19.625 +0.75 +4.0 Citicorp 24.625 +0.625 +2.6 Chase Manhattan 27.50 +0.50 +1.8 H.F. Ahmanson 21.75 +0.375 +1.7 GlenFed 15.125 +0.25 +1.7 Mellon Bank 29.75 +0.50 +1.7 Golden West Financial 32.25 +0.50 +1.6 Bankers Trust 45.125 +0.625 +1.4 Chemical Banking 28.375 +0.385 +1.3