Asset management and custody firm State Street Corp said on Tuesday that quarterly operating earnings would easily top Wall Street forecasts, sending its shares up nearly 10 percent and boosting the broader market.

Bank stocks rallied after heavy losses in recent weeks, with the KBW bank index <.BKX> up 5.6 percent. State Street's forecast reinforced expectations that banks that don't trade for themselves would perform well in the coming earnings season.

State Street, the third-largest U.S. custody bank, said second-quarter operating earnings would be 93 cents a share, handily beating analysts' average forecast of 72 cents as compiled by Thomson Reuters I/B/E/S.

The company offered only a preview of its earnings, leaving analysts to wait for its full report, due July 20, to learn exactly why results were so strong.

But it did hint at the reasons, saying momentum in revenue from servicing fees and improved revenue from trading-services fees powered operating earnings. These expected results are consistent with the full-year operating-basis outlook we provided in the second quarter, the company said in a statement.

Shares in State Street rivals Northern Trust Corp and Bank of New York Mellon Corp also jumped as investors hoped to see similarly strong results there.

State Street's unexpected announcement prompted analysts at Janney Capital Markets to upgrade their recommendation to buy, arguing that the company is now on track to achieve its full-year earnings-per-share outlook of $3.32.

We believe the shares are very attractive on a risk/return perspective and recommend purchase despite the potential for additional litigation related charges this year, Thomas McCrohan and Leonard DeProspo wrote in a note.

State Street, which earns fees for offering services like record-keeping to mutual and hedge funds, also said it would take a one-time charge of $251 million, or 50 cents per share, in the quarter for an injection of money to support trust funds that its money management arm offers.

Analysts welcomed the move, saying State Street had tackled a long-time problem quickly after a new chief executive took over in March.

Today's announcement demonstrates our commitment to resolving the challenges resulting from market turmoil over the past several years, said Joseph Hooley, who succeeded Ronald Logue as CEO on March 1.

State Street injected $330 million into the collateral pools held by its State Street Global Advisors securities lending funds. The move will allow it to lift redemption restrictions, in place since October 2008, starting next month. This is expected to reduce potential liability concerns, the company said.

These funds managed are managed like money market funds which try to keep a net asset value of $1.

Last month a team of eight, including Craig Starble, who had led the securities finance unit, quit State Street. The company is suing some of the eight.

State Street said it expects second-quarter operating revenue of $2.2 billion, in line with analysts' expectations.

The bank also said it would record a one-time tax benefit of $180 million, or 36 cents per share, because of restructuring non-U.S. assets.

State Street shares, down 23 percent this year through Monday, were up as much as 11 percent during the day and closed up 9.9 percent, or $3.29, at $36.63.

(Reporting by Svea Herbst-Bayliss and Elinor Comlay; Editing by Gerald E. McCormick, John Wallace, Gary Hill)