American Express: Financial Winners & Losers

American Express shares rose after an analyst upgraded the stock to a buy rating.
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(American Express and other stock prices brought current in this update.)

NEW YORK (

TheStreet

) --

American Express

(AXP) - Get Report

was among the top performers of the financial sector Thursday after an analyst upgraded the stock to a buy rating following a 15% drop in share price this month.

American Express

shares rose after Sandler O'Neill analyst Michael Taiano upgraded the stock to buy from hold, citing the recent pullback in the stock. Taiano highlighted other positives for the credit-card issuer, including a sharp rebound in discretionary spending trends and "favorable" leading indicators for credit performance.

"Overall, we think the severity of the financial crisis has forced management to refocus on better monetizing the company's core strengths," Taiano wrote in a research note Thursday. He also trimmed the firm's price target for American Express to $48 from $51, citing uncertainty stemming from sovereign debt issues and regulatory changes.

Lately, American Express shares were up $1.71, or 4.5%, to $39.88.

Meanwhile, U.S. bank stocks followed the broader market higher after China's State Administration of Foreign Exchange, which manages the country's $2.5 trillion foreign reserves, denied a news report that it is reviewing its holdings of

eurozone debt

.

The

Financial Times

, citing unidentified banking sources, said SAFE officials met recently with foreign bankers to discuss eurozone debt. "This report is groundless," the agency said on its Web site. "The European market in the past, present and future always will be one of the major investment markets for the State Administration of Foreign exchange."

U.S. bank stocks jumped on the statement.

Citigroup

(C) - Get Report

climbed 3.6% to $4,

Bank of America

(BAC) - Get Report

rose 3.3% to $15.98,

JPMorgan Chase

(JPM) - Get Report

added 3% to $39.93, and

Goldman Sachs

(GS) - Get Report

was up 3% to $144.12.

In other Citigroup news, the Treasury Department said late Wednesday it raised $6.2 billion from the sale of 1.5 billion shares of Citigroup. Separately, Activist investor William Ackman of

Pershing Square Capital Management

said at an investor conference that his firm recently purchased 150 million shares of Citigroup.

Elsewhere,

American International Group

(AIG) - Get Report

is looking to divest its consumer finance unit

American General Finance

in an effort to raise funds to repay the U.S. government,

The Financial Times

reports.

AIG

has hired Bank of America/Merrill Lynch to restructure and sell AGF, the report said, citing people close to the situation. Potential buyers, which include private-equity funds and financial groups, have been asked to submit their expressions of interest over the next few weeks, one person involved in the process told the

FT

.

AIG shares were rising 6.3% go $36.19.

Meanwhile, U.K.'s

Prudential PLC

(PUK) - Get Report

jumped 9.7% to $15.91 following a report by

The Wall Street Journal

that the insurer is negotiating with AIG to lower the price it will pay for the U.S. insurer's Asian unit from $35.5 billion.

Elsewhere, shares of

Moody's

(MCO) - Get Report

slipped 0.6% to $20.76 after hedge fund manager

David Einhorn

of Greenlight Capital said at an investor conference Wednesday that he is bearish on the ratings agency because of its short-term approach to credit assessments.

McGraw-Hill

(MHP)

, which owns Moody's rival Standard & Poor's, rose 1.1% to $28.30.

-- Written by Robert Holmes in Boston

.

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