Updated from 12:52 p.m. EDT

The financial sector lagged behind the broader market Thursday despite bouts of positive analyst research and a share buyback at

Countrywide Financial

( CFC).

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The mortgage lender saw a din of trading that pushed shares up 2.4% to $41.31 after saying it will repurchase up to 23 million of its shares, financed by $4 billion in privately placed convertible senior debentures. Remaining funds from the bonds will go to general corporate purposes.

Several financial names also gained on positive analyst calls. Morgan Stanley said

Principal Financial Group

(PFG) - Get Report

stock has trailed its peers lately and now has a fair amount of upside potential, prompting an upgrade to equal-weight from underweight. Shares of the Iowa-based asset manager rose 41 cents to $61.36.

Ohio insurer

ProCentury

(PROS) - Get Report

and Atlanta's

SunTrust Banks

(STI) - Get Report

were each upped to buy, respectively at BB&T Capital Markets and at Punk Ziegel. ProCentury shares jumped 6.2% to $17.74; SunTrust added 0.9% to $89.23.

On the flip side,

Doral Financial

(DRL)

was one of the day's worst financial losers, plummeting 19.4% on word it will

sell $610 million of its shares

for a precipitous discount of 63 cents apiece to a group led by

Bear Stearns

( BSC).

Following the transaction, which will help pay off heavy debt and a shareholder class-action lawsuit settlement, the struggling Puerto Rico lender will be 90% owned by the investor group -- henceforth a new entity called Doral Holdings. Doral shares closed at $1.

Elsewhere,

Franklin Resources

(BEN) - Get Report

lost 1.7% to $134.50 after UBS cut the California-based asset manager to neutral from buy on valuation. New Jersey's

OceanFirst Financial

(OCFC) - Get Report

dipped 0.8% earlier in the day but closed up 1.3% to $17.13 after its chief lending officer, Robert Pardes, left the company. The bank will also shut down its Columbia Home Loans unit, of which Pardes was previously president and which incurred "significant operating losses" due to subprime-mortgage lending.

More broadly, the

NYSE

Financial Sector Index slid 0.4% to 9,843.31. The KBW Bank Index, which tracks large banks, performed a bit better but was still 0.1% in the red at 117.70.