Thursday's Financial Winners & Losers

Updated from 1:06 p.m. EDT

The financial sector joined the sliding broader market for the third straight session Thursday, largely scooping just under the major indices. Weighing heavily was Security Capital Assurance (SCA Quote).

The Bermuda-based insurer slid 3.6% to $30.61 in unusually active trading on news that its parent, XL Capital (XL Quote), is offering 9.68 million SCA shares at $31 apiece, thereby slashing its stake in SCA to roughly 47.5% from 63%. If underwriters fully exercise their 1.45-million-share purchase option, XL will own just 45.3% of the company.

SCA priced the shares postbell Wednesday after filing for the offering two weeks ago. XL closed Thursday off 2.7% at $80.49.

The NYSE Financial Sector Index, which harbors both SCA and XL, slumped 174.24 points, or 1.8%, to 9651.73. The KBW Bank Index fared a bit better but was still down 1.3% to 113.87.

Also suffering were both PNC Financial (PNC Quote) and Yardville National Bancorp (YANB Quote) after the former agreed to buy the latter for $35 a share in stock and cash -- a slight discount to Yardville's latest closing price. The $403 million transaction will likely close in the fourth quarter and should be accretive to PNC's per-share earnings in 2008.

Pittsburgh-based PNC lately lost 0.7% to $71.32; Yardville, of New Jersey, slumped 4.5% to $34.15.

H&R Block (HRB Quote) stumbled 3.8% at $22.06 even though the Kansas City, Mo., tax preparer raised next quarter's dividend by 5.6% to 14.25 cents a share, to be paid in October; and mortgage lender Fannie Mae (FNM Quote) slipped 61 cents to $63.44 despite a Friedman Billings upgrade to outperform. The analyst cited improving option-adjusted spreads, among other things.

A couple of financial stocks, however, benefited from positive analyst calls. Pennsylvania's Susquehanna Bancshares (SUSQ Quote) gained 3% to $22.26 after Stifel Nicolaus raised its rating to hold from sell. Meanwhile, Keefe Bruyette upped CoBiz (COBZ Quote) to outperform from market perform. Shares added 2 cents to $18.17.