Updated with market close information, information on the latest mortgage lawsuit against Bank of America and Regions Financial's resumed discussions for the possible sale of its Morgan Keegan unit to Stifel Financial.
Reuters reported that National Integrity Life Insurance -- Subsidiary of Western & Southern Mutual -- has sued Bank of America and Countrywide Financial for fraudulent sales of mortgage-backed securities, seeking damages of at least $93.8 million. Bank of America acquired Countrywide in 2008.
Early trading was strong, with European markets calming down after Wednesday's declines, after the Italian government successfully completed an auction of ¿5 billion ($6.8 billion) in one-year notes at an average rate of yield 6.087%, according to Bloomberg, which was way up from 3.57% at Italy's previous one-year auction in October.Investors also reacted positively to reports that economist and former European Central Bank Vice President Lucas Papademos had been named the new prime minister of Greece, replacing George Papandreou, who rattled international markets last week by calling for a national referendum on the euro-zone's $177 bailout package for the country, only to withdraw the referendum plan later in the week. Large European financials seeing 4% gains in U.S. trading on Thursday included ING Groep (ING), closing at $7.77, and Deutsche Bank (DB), which closed at $37.48. U.S. stocks pared earlier gains on positive economic reports, after Dow Jones Newswires cited Bernhard Felderer -- chief economist of the Austrian think tank The Institute for Advanced Studies -- as saying that Austria could be the next European country to see a credit rating downgrade. The Dow Jones Industrial Average and S&P 500 both saw 1% gains, while the Nasdaq rose only less than 4 points. The KBW Bank Index (I:BKX) was up 1% to close at 38.73, with 20 of out of 24 index components holding onto gains. Shares of American International Group (AIG) rose 3% to close at $23.15. M&T Bank (MTB) was also up 3%, closing at $72.37. U.S. banks logging 2% gains included Commerce Bancshares (CBSH), Fifth Third Bancorp (FITB), PNC Financial Services Group (PNC), and U.S. Bancorp (STI). Shares of Regions Financial (RF) were up 1.5% to close at $4.14, following a Bloomberg report that the Birmingham, Ala., lender had resumed negotiations to sell its Morgan Keegan brokerage unit to Stifel Financial (SF). According to the report, Regions has received private equity bids of up to $750 million for the unit, while Stifel has indicated its offer could top $1 billion. Stifel's shares declined 1.5% to close at $30.00. Shares of Goldman Sachs (GS) trimmed earlier gains to close at $99.50, which was a slight decline, after the company announced late Wednesday in its quarterly 10-Q filing with the Securities and Exchange Commission that various plaintiffs were demanding rescission of mortgage-backed securities pools with total original notional values of $15.8 billion, as of Sept. 30. Claims against the investment bank include the Federal Housing Finance Agency's $11.1 billion mortgage putback demand against the company in September, when the regulator of Fannie Mae (FNMA) and Freddie Mac (FMCC) sued 17 banks over mortgage losses.
Philip van Doorn. To follow the writer on Twitter, go to http://twitter.com/PhilipvanDoorn.
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