Financial Winners & Losers: Ambac

Even downgrades and bearish notes didn't damp financial stocks Thursday.

MBIA(MBI Quote) and Ambac(ABK Quote) both jumped, despite downgrades by Standard & Poor's, a day after Moody's threatened the same. The companies said they would not raise new capital. Ambac gained 13 cents to $2.62, while MBIA closed up 41 cents to $6.04.

A Goldman Sachs analyst suggested the Charlotte, N.C.-based Wachovia (WB Quote) should cut its dividend in half to raise more capital. The analyst has also cut his second quarter estimates to a loss of 20 cents and lowered the price target to $28. Shares of Wachovia slipped in early trading, but closed up a penny to $21.59.

Overall though, the NYSE Financial Sector Index advanced 125.72 to 7,313.70.

Citizen's Republic Bancorp(CRBC Quote) plunged 15.4% to $4.39 after a Fox-Pitt Kelton analyst pointed out that the problems facing the Midwestern bank raises concerns about other similar banks. Citizen's recently said it would take huge writedowns as a result of the mortgage meltdown and be forced to raise more capital. The analyst expects more banks to cut dividends and go after more cash.

Regional bank Webster Financial(WBS Quote) shares tumbled 13.4% to $22.18. The Waterbury, Conn.-based bank said it will sell convertible preferred stock in an effort to raise cash.

E*Trade Financial(ETFC Quote) shares jumped 13 cents to $4.08. The electronic broker will debut a mobile trading platform that will be compatible with BlackBerry phones. The Mobile Pro is currently getting tested by select customers.

Investment bank Lehman Brothers(LEH Quote) is staying firmly in the headlines having received a reiteration of a buy rating from Deutsche Bank. The stock shot up 4.7% to $32.86. Lehman has struggled as a hedge fund manager has publicly questioned its financial stability and the company admitted it may need to raise more capital.