DURING PREFLT; ALTIMETER WAS SET 1' TOO HIGH RESULTING IN ALT BUST.

Narrative

BEFORE TKOF WE WERE GOING THROUGH THE CHKLIST. WHEN WE CAME TO THE ALTIMETER CHK; THE F/O READ THE ALTIMETER HE HEARD ON ATIS (30.56 IN). DURING CRUISE NY APCH CALLED US AND ADVISED US TO; 'MAINTAIN 3000'.' WE BOTH CHKED OUR ALTIMETERS AND BOTH INSTRUMENTS READ 3000'. I THEN CHKED MY RADAR ALTIMETER AND NOTED THAT IT READ 2000'. WHILE I WAS CHKING MY POS IN THE CHARTS; TO SEE IF WE WERE OVER THE BLDGS IN MANHATTAN; APCH CALLED US AGAIN TO ADVISE; 'CLB AND MAINTAIN 3000'.' WE RESPONDED WITH; 'SAY CURRENT ALTIMETER SETTING.' APCH SAID; '29.56.' WE RETUNED OUR ALTIMETERS FROM 30.56 TO 29.56; THEN CLBED TO 3000'. AS BEST AS WE CAN TELL; WE INCORRECTLY TUNED IN THE 30.56 SETTING ON THE GND. A CONTRIBUTING FACTOR TO THIS ERROR WAS THAT OUR ALTIMETERS WERE ALREADY SET TO 30.54 OR .02 AWAY FROM THE INCORRECT 30.56 SETTING. ALSO; OUR ACFT ARE NOW EQUIPPED WITH THE NEW STYLE ENCODING ALTIMETER WITH ONLY THE SINGLE ANALOG NEEDLE FOR HUNDRED FEET INCREMENTS. THOUSAND FOOT INCREMENTS ARE GIVEN IN A DIGITAL WINDOW THAT CAN BE MISREAD AT EVEN LEVEL ALTS. EXAMPLE: ONE THOUSAND FEET JUST PRIOR TO ALL DIGITS CHANGING FROM 900'.