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Updated with stock price moves.




) --

Bank of America

(BAC) - Get Bank of America Corp Report

was among the losers of the financial sector Monday after a bank analyst argued that it would have to sell more stock to satisfy the U.S. government's demands, which would "meaningfully harm" shareholders.

Bank of America shares were down 92 cents, or 5.7%, to $15.30 after Rochdale Securities analyst Dick Bove late Friday said that BofA wants out of the "uneven partnership" with the government, which apparently is saying no to a deal. If BofA did what the government wants "it would have to sell 3 billion shares or increase its share base by 35%," Bove said.

"Bottom line, the bank and its shareholders must stay chained to a government that only demonstrates ill will toward the organization," Bove wrote in his research note.

Bove also made headlines after cutting his rating on

Fifth Third Bancorp

(FITB) - Get Fifth Third Bancorp Report

to sell from neutral and the price target to $9 from $11. Bove argued that continued losses will prevent the leveraging of the balance sheet and may, at some point, force an equity offering. He added that Fifth Third may not show a profit until 2011.

He also reduced his rating for

TheStreet Recommends


(STI) - Get SunTrust Banks, Inc. Report

to sell from neutral. Bove said the bank's loan losses from its exposure to Florida and the housing market may keep the company in a loss position until the beginning of 2011.

Fifth Third shares were falling by 73 cents, or 7.1%, to $9.61. SunTrust was down $1.06, or 5.1%, to $19.93.

Among winners,

Legg Mason

(LM) - Get Legg Mason, Inc. Report

rose by 72 cents, or 2.3%, to $32.62 after activist investor Nelson Peltz was named to the board of directors after accumulating a 4.3% stake in the company.

Peltz's New York hedge fund, Trian Fund Management, as part of Peltz's joining the board, has agreed to vote its shares in favor of Legg Mason's director nominees.

Also trading higher were

American Express

(AXP) - Get American Express Company Report

, up 2.1% to $35.31, and

Discover Financial

(DFS) - Get Discover Financial Services Report

, which rose 0.5% to $15.11.

On the downside,

American International Group

(AIG) - Get American International Group, Inc. Report

slumped 4.7% to $37.06,


(C) - Get Citigroup Inc. Report

gave back 2.5% to $4.35,

JPMorgan Chase

(JPM) - Get JPMorgan Chase & Co. Report

slid 2.4% to $44.15, and

Wells Fargo

(WFC) - Get Wells Fargo & Company Report

was losing 2% to $28.73.

-- Written by Robert Holmes in New York


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