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Updated from 1:28 p.m. EST with new stock prices

A mixed bag of news left financial stocks little changed Thursday morning before the sector began to lose its strength later in the day, but some stocks -- such as

Morgan Stanley

(MS) - Get Morgan Stanley Report

-- were shoring up gains following Wednesday's devastating selloff.

Morgan announced that the value of its subprime-related exposures had dropped by $3.7 billion pretax since the beginning of its fiscal third quarter, and a few analysts cut their price targets on the firm in response. But shares found relief seeing as that figure is below the midpoint of a range from two analysts cited by

The Wall Street Journal


Those analysts -- from Fox-Pitt, Kelton and Deutsche Bank -- had pegged the number at $3 billion to $6 billion, according to the


. After taxes, said Morgan, the writedown should shrink fourth-quarter income by about $2.5 billion. Shares were tacking on 4.8% at $53.68 to recoup some of yesterday's substantial losses.

Elsewhere in positive territory, Bermuda insurer

Assured Guaranty

(AGO) - Get Assured Guaranty Ltd. Report

jumped 3% to $19.00 after saying it will repurchase up to 2 million of its shares, having completed its prior million-share authorization in the third quarter, and

Wells Fargo

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(WFC) - Get Wells Fargo & Company Report

added another 75 million shares to its buyback program. Shares of the San Francisco bank ticked up 2.3% to $31.48.

Wells Fargo's gain lent support to the KBW Bank Index, and all of the above stocks are components of the


Financial Sector Index, and the trackers climbed 1.2% and 0.2%, respectively.

Helping to weigh down the NYSE financial index, though, was insurance behemoth

American International Group

(AIG) - Get American International Group Inc. Report

. The New York firm said adjusted income

fell 13.2% from last year to $3.49 billion, or $1.35 a share -- far below the average analyst estimate for $1.62 a share, as per Thomson Financial. Shares slid 3.3% to $56.00.

In negative analyst calls, Lehman Brothers cut Bermuda insurer

Primus Guaranty

(PRS) - Get Prudential Financial Inc. 5.625% Junior Subordinated Notes due 2058 Report

to underweight, and Dutch bank

ING Group

(ING) - Get ING Group N.V. Report

got a Bear Stearns downgrade to peer perform from outperform. Shares of the firms were losing 13.2% and 0.9%, respectively.


Merrill Lynch


was on another downturn after disclosing in its quarterly filing that

Securities and Exchange Commission

staff "initiated an inquiry into matters related to Merrill Lynch's subprime mortgage portfolio" a couple of weeks ago. The broker's exposure to such investments pressured it into a

huge third-quarter loss, as it recently reported, and ultimately led to the

ouster of CEO Stanley O'Neal.