July 16 (Reuters) - State Street on Tuesday

reported a rise in client assets under management which helped

the custodian bank rake in more fees from the service, sending

its shares up 0.8% in premarket trading.

Fee revenue came in at $2.46 billion, up from $2.42 billion

in the year-ago period, which helped the custodian record a

revenue growth of 3%.

State Street's quarterly revenue was $3.19 billion, beating

analysts' estimates of $3.15 billion, according to LSEG data.

Assets under management (AUM) climbed 16% to $4.42 trillion

due to a strong rally in the equity markets on hopes of a soft

landing for the economy. The benchmark S&P 500 index was

up 4% in the three months ended June 30.

State Street services and manages investments for

high-net-worth clients that include governments, institutions

and investment companies.

The bank had a record $44.31 trillion in assets under

custody and/or administration (AUC/A) at the end of the June

quarter, up from $39.59 trillion last year.

The bank's profit in the quarter, however, fell 7% to $711

million or $2.15 per share, hurt by higher expenses.

Last week, peer custodian BNY beat second-quarter

profit as strong investment service fees more than offset lower

interest income.

Meanwhile, State Street's net interest income (NII) rose 6%

to $735 million from a year earlier, which according to CEO Ron

O'Hanley was due to "management actions".