NEW YORK (AP) -- Like a duck to water, bank stocks are taking to the idea that central banks will keep interest rates low.
Shares of the country's six mega-banks were all up Friday afternoon. The biggest increases were at Bank of America and Morgan Stanley, both rising almost 5 percent.
On Thursday the European Central Bank announced it will buy bonds to lower the high interest rates that struggling countries like Spain and Italy are saddled with. Next week the Federal Reserve may announce its own plans to keep interest very low and help stimulate the U.S. economy.
More than some other industries, financial companies are tied tightly to interest rates because they make money by charging more in interest on their loans than they pay in interest on the deposits they keep. While low interest rates crimp the profits they can make from lending, they also control the costs for deposits, often one of their biggest expenses. Though that presents another challenge, how to attract depositors when rates are so low, it's not the most pressing concern since other institutions are also paying low rates.
"This would be like the airline industry, if all of a sudden an announcement came out that the price of oil is going to be at a very low rate for a long time," said Ken Thomas, a Miami-based banking consultant and economist.
The ECB's announcement was also good news because banks and other financial firms are significantly affected by Europe. For at least a year, many have been scaling back their investments there. Morgan Stanley especially suffered late last year when investors began to worry about the bank's exposure to the debt-ridden continent.
Since June financial stocks have been rising more or less steadily along with the rest of the stock market. Friday afternoon, half of the 10 industry sectors on the Standard & Poor's 500 were down, but financials were up 1.1 percent, behind only energy and materials.
To be sure, the gains come after big losses. Bank stocks are still far below where they were before the financial crisis. And last year, after gaining on the S&P 500 in 2009 and 2010, the financial sector fell.
Plenty of roadblocks still remain. The industry is reshaping to meet new regulations brought on by the financial crisis. And even now, as soon as one scandal quiets down, another seems to emerge.
"Bank stocks have been down in the dumps for so long," Thomas said. "Everyone's looking for a positive sign."
Citigroup, Goldman Sachs, JPMorgan and Wells Fargo were all higher Friday afternoon.