NEW YORK (Thomson Financial) - The regional bank sector turned positive,
erasing sharp earlier gains, boosted by strength in recently troubled stocks
such as Fifth Third Bancorp and BB&T Corp.
The Regional Bank Holdrs ETF (RKH) rallied 0.9% to $98.65, with 12 of 18
components contributing to gains. Earlier in the session, the sector tracking
stock was down as much as 3.6% at a 5-year low of $94.26 after Merrill Lynch cut
its earnings estimates and price targets on the group amid increased credit loss
expectations.
Among the RKH's biggest gainers, Fifth Third Bancorp rose 8.8% to $10.61
after being upgraded to outperform from market perform by Keefe, Bruyette &
Woods. The stock had hit a 14-year low of $8.96 in intraday trading on Thursday.
BB&T tacked on 5.2% to $25.61. On Thursday, the stock hit an 11-year low of
$21.40 in intraday trading, before bouncing to close with a slight gain after
the company affirmed that its capital remained strong and that it anticipates
"some increase" in the case dividend in 2008.
"This company is not the same as numbers of banks that are dealing with bad
management due to excessive risk taking yet its stock is being treated as if it
was," said Ladenburg Thalmann Analyst Richard Bove in a research note. "There is
clearly good value here based on superior management. The issue should be
bought."
Among other RKH components, US Bancorp was up 0.5% at $30.08, JPMorgan Chase
was 0.5% better at $38.84, Wells Fargo slipped 0.5% to $25.14, Comerica Inc.
climbed 6.8% to $30.67, Regions Financial advanced 5% to $11.74 and Bank of
America slipped 1% to $27.87.
The rebound wasn't confined to regional banks, as the SPDR KBW Bank ETF
(KBE) was last up 0.9% at $31.44, with 16 of 24 components gaining ground,
erasing earlier losses of as much as 4.1%.
Tomi Kilgore
tk1
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