Oct 17 (Reuters) - State Street reported an 18%

rise in third-quarter profit on Friday, benefiting from higher

fees as soaring markets boosted the value of the custodian

bank's assets.

Easing interest rates and AI-fueled bullish sentiments

propelled major U.S. indices to multiple record highs during the

quarter, lifting the value of State Street's assets.

The bank's assets under custody and administration rose 10%

to a record $51.7 trillion in the three months ended September

30 from a year earlier.

Its total fee revenue, most of which it earns as a

percentage of assets, climbed 9% to $3.55 billion.

State Street's servicing fees rose 7.2% to $1.36 billion in

the quarter, while its management fees jumped 16.1%.

It reported a profit of $861 million, or $2.78 per share, up

from $730 million or $2.26 per share a year earlier.

The results mirror that of larger peer BNY, which

also reported a higher profit on Thursday, helped by fee growth.

State Street's expenses, however, rose 5.5% to $2.43 billion

in the quarter, as the company spent $517 million on information

systems and communications, up 11.7% from the year-ago period.

Shares of the company fell 3% in premarket trading.