Sector Snap: Bank Stocks Get Boost From Upgrades

NEW YORK (AP) — Bank stocks got a boost Thursday from an upbeat outlook on the industry from a group of RBC Capital Markets analysts who contend that the worst of the financial crisis is over.

The KBW Bank index, which tracks 24 of the nation's largest banks, rose 3.1 percent in midday trading, after posting small declines earlier this week.

RBC raised its rating on the financial sector to "Overweight" from "Market Weight," saying capital and liquidity risks have been significantly reduced. Banks are now in a position to outperform the broader market for several years to come, the analysts said, after underperforming the market for the past few years.

Among the biggest gainers Thursday was KeyCorp, which RBC upgraded to a "Top Pick." Shares of the Cleveland-based regional bank jumped 60 cents, or 13 percent, to $5.20.

Other top performers included PNC Financial Services Group Inc., which rose $2.74, or 6.8 percent, to $43.07, and Fifth Third Bancorp, which added 63 cents, or 9.7 percent, to $7.15.

Banks saw the value of their stocks plunge as defaults on loans and foreclosures soared in the wake of the housing and credit crises of last fall. But since early March, financial stocks have been a driving force of the market's spring rally, as first-quarter results largely surpassed expectations and banks appeared to be on more solid footing.