July 17 (Reuters) - Asset and wealth manager Northern Trust posted a more than two-fold jump in second-quarter profit on Wednesday, thanks to higher fee income and an accounting gain of $878.4 million from a stock exchange deal with Visa.

Hopes of a soft landing for the U.S. economy and investor frenzy around artificial intelligence have lifted the stock market to record highs this year, leading to a spurt in Northern's assets under custody.

Trust, investment and other servicing fees rose 6%, to $1.17 billion, driven by a 14% jump in assets under custody or administration to $16.57 trillion.

Fees earned from managing and servicing client assets are the biggest source of revenue for the 135-year old company. Northern provides wealth management, asset management and banking services to institutions, affluent families and individuals.

State Street and BNY, which posted results last week, also saw rising client asset values boosting their fee-based incomes.

Chicago, Illinois-based Northern also benefited from a plan to exchange some of its Class B shares in Visa, the world's largest payment network.

Meanwhile, Northern's net interest income - the difference between what it earns on assets and pays out on liabilities - rose 2%, to $522.9 million on a reported basis, driven by higher client deposits. Its NII is highly sensitive to deposit levels and largely driven by client deposit behavior.

Foreign exchange trading income surged 17%, to $58.4 million, driven by higher client volumes.

Northern's earnings allocated to common and potential common shares rose to $884.3 million, or $4.34 per share, in the three months ended June 30, from $323.7 million, or $1.56 per share, a year earlier.

Shares of the company have risen 7.6% so far this year, compared to a 9.5% and 24.9% jump, respectively, for peers State Street and BNY. (Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Pooja Desai)