Two of the leading U.S. custody banks reported higher quarterly earnings on Tuesday as assets under management and fees increased along with the rising stock market and improved financial market conditions.

Bank of New York Mellon Corp and State Street Corp make the bulk of their income from fees charged on investment management and services.

BNY Mellon's assets under custody and administration rose 2 percent from the prior quarter to a record $25.5 trillion, reflecting higher market values and net new business, while State Street's rose 5 percent to $22.6 trillion.

Assets under management rose 5 percent to $1.2 trillion at BNY Mellon quarter-to quarter and gained 5.5 percent to $2.1 trillion at State Street.

BNY Mellon said first-quarter earnings from continuing operations, excluding special items, rose to $699 million, or 55 cents a share, from $601 million, or 49 cents a share, a year earlier.

Analysts on average expected earnings from operations of 57 cents a share, according to Thomson Reuters I/B/E/S.

We continued to grow revenue and earnings despite the challenging environment, and did so with a clean balance sheet, BNY Mellon Chief Executive Officer Robert Kelly said in a statement.

State Street said that excluding special items, earnings rose to $444 million, or 88 cents a share, from $371 million, or 75 cents a share, a year earlier. Analysts had expected 86 cents a share.

CEO Jay Hooley lauded the company's recent acquisitions.

The performances of our securities servicing business that we acquired from Intesa Sanpaulo and the acquired Mourant business are exceeding the goals we set, Hooley said.

(Reporting by Svea Herbst and Toni Clarke; Writing by Ros Krasny; Editing by Lisa Von Ahn)