Financial Winners and Losers: AIG

Updated from 12:17 p.m. EDT

Bank stocks traded mixed Tuesday following media reports that 10 of the 19 major U.S. financial institutions to will need to boost capital levels after the government's stress tests were completed.

According to a report in The Wall Street Journal, the U.S. government will direct about 10 U.S. banks undergoing government stress tests to boost their capital levels. The banks are expected to be briefed on the official results of the stress tests Tuesday.

The Journal's report went on to say that officials at one point believed as many as 14 banks would need to raise more funds to create a stronger buffer against future losses, but that number has fallen in recent days.

The news comes one day after reports that Wells Fargo (WFC Quote), Citigroup (C Quote) and Bank of America (BAC Quote) were told by the government that each needs additional capital.

The government stress test results were expected Monday but were delayed until Thursday afternoon.

Citigroup shares were higher by 3.4% at $3.31 and Bank of America added 4.4% to $10.84. On the other hand, Wells Fargo slid 4% to close at $23.27 and JPMorgan Chase (JPM Quote) was down 2.7% to $34.82.

Elsewhere, AIG (AIG Quote) shares rallied 18.5% after a Reuters report said that the insurer is expected to report a first-quarter loss Thursday, but that its results won't trigger a new capital injection from the U.S. government.

Among decliners, UBS (UBS Quote) once again reported a quarterly loss, this time losing 1.98 billion Swiss francs ($1.75 billion) in the first quarter, primarily on losses suffered at its investment bank. A year earlier, UBS reported a loss of 11.62 billion Swiss francs. UBS shares shed 1.7% to close at $14.33.

Legg Mason (LM Quote) shares plummeted after the money-management firm reported a wider quarterly loss on expenses related to reducing its exposure to risky investment vehicles. Legg Mason also announced that it would slash its dividend 88% to 3 cents a share. Shares tumbled 17.3% to $18.63.