NEW YORK, DEC. 11 -- News of the death of oilman Armand Hammer was received with a ghoulish enthusiasm today by Wall Street's traders, who pushed up the price of stock in Occidental Petroleum Corp., the once tiny California drilling company that Hammer transformed into a worldwide conglomerate.

The price jump reflected the view, widely shared in the investment community, that Occidental's new management will boost the company's value by taking several steps Hammer had blocked -- for reasons having more to do with his own ego than anything else, according to a number of analysts who follow the company.

"There are certain assets that I think Dr. Hammer was more tied to than the current management will be," said Frederick P. Leuffer Jr., a senior oil analyst at C.J. Lawrence, Morgan Grenfell Inc., a brokerage firm based here.

The market hopes Occidental can use the sale of assets to reduce its heavy, $8.5 billion debt burden, making it easier to continue paying the generous quarterly dividend that was also a point of pride with Hammer and a point of keen interest among the thousands of small investors who bought Occidental shares.

Occidental is also seen, by those whose job is to sniff out potential targets, as an attractive takeover candidate now that the company is free of the vise-like grip of the man who made no bones about treating Occidental as his own.

"Basically, you had a one-man show, and the one man was kind of unpredictable," said one Wall Street executive.

In the past, rumors that Hammer was seriously ill had sent Occidental shares up. On the event of his death, the price jumped $1.87 1/2 to $22.62 1/2, in trading of 8.1 million shares that made Occidental by far the most heavily traded share on the New York Stock Exchange.

Underlining the impact of Hammer's death, the second most actively traded share was that of IBP Inc., the Nebraska-based meatpacking concern in which Occidental holds a controlling 51 percent stake. Because meatpacking does not show the kind of "synergy" with Occidental's core businesses -- oil and gas exploration and chemical manufacturing -- it is considered a likely candidate to be spun off.

Several analysts said today that it was widely known that Hammer insisted on retaining the IBP interest for reasons of prestige: The majority stake allowed Occidental to count IBP's revenues as its own, and thus gave Occidental a ranking as the nation's 16th largest industrial company in the annual Fortune 500 listing by Fortune magazine. Without IBP's revenues, Occidental would have been listed closer to 40th.

One analyst said Hammer kept the IBP stake for three reasons, "ego, ego and ego." Another said it was "a perfectly ridiculous reason to own a company."

At the close of trading today, IBP was up $2.62 1/2 to $19.

Other Hammer ventures that raised eyebrows on Wall Street included his investments in communist countries, such as various chemical and agricultural projects in the Soviet Union and, especially, a large coal mine in China. In these enterprises, profit for Occidental's shareholders appeared to be a secondary objective behind Hammer's desires to bridge international political gaps and to obtain publicity for his activities as a capitalist goodwill ambassador to the communist world.

Unlike Hammer, Occidental's new chief, Ray R. Irani, enjoys the confidence of the investment community. He is expected to avoid rushing to stage any fire sale of unwanted Occidental divisions, moving, after a decent interval, to sell assets when a good price is available.

"I think the company has been left in strong hands. Ray Irani has been understudying Dr. Hammer for quite a while," said Eugene L. Nowak, a senior oil analyst and director of the energy group at Dean Witter Reynolds Inc. brokerage firm here. "I think it's going to be a moderate, selective, and well-thought-out restructuring process as time goes on."

Occidental declined to comment on its strategy, as a spokesman said Irani "feels it would be inappropriate to discuss those matters at this time." But a source said the board of directors had scheduled a meeting for Thursday to discuss the company's future.