WASHINGTON - The Supreme Court ruled yesterday that white firefighters in New Haven, Conn., were unfairly denied promotions because of their race, reversing a decision that high-court nominee Sonia Sotomayor endorsed as an appeals court judge.

The ruling could alter employment practices nationwide and make it harder to prove discrimination when there is no evidence it was intentional.

New Haven was wrong to scrap a promotion exam because no African-Americans and only two Hispanic firefighters were likely to be made lieutenants or captains based on the results, the court said yesterday in a 5-4 decision. The city said that it had acted to avoid a lawsuit from minorities.

The ruling could give Sotomayor's critics fresh ammunition two weeks before her Senate confirmation hearing. Conservatives say it shows she is a judicial activist who lets her own feelings color her decisions. On the other hand, liberal allies say her stance in the case demonstrates her restraint and unwillingness to go beyond established precedents.

Also yesterday, the court ruled that a federal bank regulator erred in quashing efforts by New York state to combat the kind of predatory mortgage lending that triggered the nation's financial crisis.

The 5-4 ruling by the high court was unusual - and a rebuke of the Bush administration. Justice Antonin Scalia, arguably the most conservative jurist, wrote the majority's opinion and was joined by the court's four liberal judges.

The five justices held that contrary to what the Bush administration had argued, states can enforce their own laws on matters such as discrimination and predatory lending, even if that crosses into areas under federal regulation.

Justice Clarence Thomas, writing for the four dissenters, argued that laws dating back to the nation's founding prevent states from meddling in federal bank regulation.

Many in the financial sector fear the ruling will lead to a patchwork of state laws that will make it harder for banks and other financial firms to take a national approach to the marketplace. *