Despite the usual stabs of discouraging news Monday, financial stocks were generally floating higher on the updraft of the broad market: recently, the


Financial Sector Index crept up 44.27 points, or 0.6%, to 7,898.91.

Lending some support was Minneapolis asset manager


(AMP) - Get Report

, which added 3.9% to $55.65 on a Keefe Bruyette upgrade to outperform. That also helped pull the Amex Securities Broker-Dealer Index 1.8% higher in recent trading.

Fremont General

( FMT) also gained ground after the California-based bank sold its Irving, Texas loan-servicing facility, thus taking another step toward transitioning out of its discontinued real-estate lending business. Fremont didn't specify the sale price, but it expects to save some $12 million a year in overhead costs after the deal closes in the current quarter. Shares were up 17 cents, or 4.8%, to $3.68.


(C) - Get Report

, meanwhile, saw mixed trading after


reported that the New York bank will probably announce layoffs numbering between 17,000 and 24,000 after tomorrow's earnings report -- which, said the network, could reflect write-downs totaling as much as $24 billion. A dividend cut, the possibility of which has been

kicked around lately, may also be on the horizon.

Furthermore, over the weekend

The Wall Street Journal

reported that Saudi Prince Alwaleed bin Talal will likely be among a consortium of investors throwing a life raft to Citi. The precise dollar amount isn't yet known, but Alwaleed's holdings will probably remain under 5% for the sake of minimal regulatory hassle, said the


. China Development Bank, meanwhile, is expected to pour in roughly $2 billion. The


first reported last week that Citi is in talks with more foreign investors following a

hefty Middle Eastern cash injection in November.

Citi was ticking up 1% to $28.83 after a dip into the red, which helped slow the KBW Bank Index's downward momentum. Still, the sector tracker was recently off 0.2% at 83.86.

Among individual financial losers Monday,

Sovereign Bancorp

( SOV) gave up 2.8% to $10.38 after the Philadelphia bank said that, largely due to weakening broad-market trends, it will

take a noncash hit of around $1.58 billion in the fourth quarter. Contributing $180 million to the charge will be a loss on certain preferred securities in

Fannie Mae

( FNM) and

Freddie Mac

( FRE), said the bank.

The bank also upped its loan and lease loss provision by 13.5% sequentially to $738 million.


M&T Bank

(MTB) - Get Report

reported plunging fourth quarter earnings of 60 cents a share, which was primarily weighed down by the eroding value of its investments in collateralized debt obligations. 8 cents worth of acquisition costs factored in the earnings reduction as well as 13 cents in shared settlement expenses from an antitrust lawsuit against Visa. Analysts polled by Thomson Financial were looking for $1.63 a share before special items. A year earlier, M&T made $1.88 a share. Its stock lately fell $1.17, or 1.6%, to $72.58.

In more familiar bad news,

Downey Financial

(DSL) - Get Report

slid 11.3% after reclassifying $99 million of its loans as nonperforming as of Sept. 30 under advice from its auditor, bringing its year-end ratio of nonperforming assets to 7.8% of total assets. The reclassified sum consists of loans that were changed, under a borrower retention program, into 5-year hybrid adjustable rate mortgages.

The assets have been deemed nonperforming since associated interest rates were lowered in the process, and since Downey didn't take such extra steps as delving into each borrower's credit report amid the currently tattered state of the mortgage and housing markets. Downey emphasized that only customers with current loans were offered the loan modification, and estimates that 95% of these loans remain current. Still, its shares dropped 3.18 to $24.90.


Friedman Billings


announced that its mortgage origination unit, First NLC Financial, is filing for bankruptcy. Shares of the Arlington, Va., company were sinking 7.9%.

But one of today's biggest percentage losers was

Novastar Financial

( NFI), shares of which recently fell more than one-third following a crushing Friday disclosure. In a postclose regulatory filing, the struggling mortgage outfit said it will fire some 170 employees in the course of shutting down its retail and brokerage operations this quarter, thus paring itself down to a total staff of around 30 people.

Novastar said it can't maintain the net worth and financial health required for "certain minimum licensing requirements" of those businesses. The moves are also intended to preserve its cash level and cut down on debt, though related costs are estimated at somewhere between $1.3 million and $1.8 million. The company warned, moreover, that this could hurt its chances of restarting a mortgage origination and brokerage business, even if the market becomes amenable to such a revival. Shares were recently changing hands at $1.93.