NEW YORK (

TheStreet

) --

Morgan Stanley

(MS) - Get Report

was the loser among the largest U.S. financial names on a rough Thursday or bank stocks in particular, with shares sliding 4% to close at 13.09.

The broad indexes rallied late to recover some of their earlier losses, but were all down over 1% for the session, after reports said that the European Central Bank had rejected plans to recapitalize Bankia, one of Span's largest financial institutions.

Meanwhile, the yield on Spain's 10-year bonds went as high as 6.67%, which was their highest level since the country joined the eurozone. With strong demand, the U.S. 10-year bond's yield declined to 1.61%.

The

KBW Bank Index

(I:BKX)

declined 2.5% to close at 43.62, with 23 out of 24 index components showing declines, except for

Bank of America

(BAC) - Get Report

, which was up 1% to close at $7.20.

Morgan Stanley's shares have now declined 13% year-to-date, after falling 44% during 2011.

The shares trade for less than half their reported March 31 tangible book value of $27.37, and for less than six times the consensus 2013 earnings estimate of $2.35 a share, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate is $1.45.

Morgan Stanley reported that its net exposure to Spain's sovereign debt was a negative $155 million as of March 31, while net exposure to non-sovereign Spanish paper totaled $1.47 billion. The company reported that its total net exposure to "European peripherals and France" was $4.1 billion.

In a report entitled "Enough is Enough," UBS analyst Brennen Hawken on May 17 upgraded Morgan Stanley's shares to a "Buy" rating, with a 12 month price target of $19, saying that the shares were "barely above the 45%

tangible book value multiple MS traded in October 2011 when the firm faced concerns over liquidity and viability," and that "in the unlikely case where MS takes a 50% haircut on its gross peripheral European and French exposure, it would reduce TBV by 6% ($1.74 per share)."

Hawken said that "even reflecting these potential adverse scenarios, we believe MS shares should trade between 60% to 70% of adjusted TBV, leaving room for about 30% upside from current levels." The shares have declined 3% since closing at $13.46 on May 17, before Hawken's report was published.

The analyst estimates that Morgan Stanley will earn $1.45 a share this year, followed by 2013 EPS of $2.55.

Interested in more on Morgan Stanley? See TheStreet Ratings' report card for this stock.

RELATED STORIES:

Big Banks Losing All Kinds of Market Share to Everybody

155 Undercapitalized Banks Still Litter U.S.

Almost 75% of Florida Banks Now Eke Out a Profit

Bank of America Shares Getting Housing Recovery Lift

5 Reasons to Buy AIG Now From Sandler O'Neill

Chinese Banks' Stealth U.S. Growth Plans Get Fed Backing

--

Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here:

Philip van Doorn

.

To follow the writer on Twitter, go to

http://twitter.com/PhilipvanDoorn

.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.