Financial stocks saw wavy trading Wednesday, together with the broad indices, as the sector offered up several pieces of mixed news.

Nuveen Investments

( JNC) was a big winner, leaping nearly 17% on word of a

$6.3 billion takeout

. A group led by Madison Dearborn Partners agreed to buy the firm for $65 a share -- a 20% premium to its latest close -- in a deal that should close by year-end.

The Chicago-based company gained $9.05 to $63.21 as other investment managers peripherally rode higher on the news -- among them

Federated Investors

(FII) - Get Report

, up 4.4%, and

Franklin Resources

(BEN) - Get Report

, which lately tacked on 2.9%.

Morgan Stanley

(MS) - Get Report

was also on the rise after

crushing

Wall Street estimates for the second quarter. The New York brokerage pocketed $3.87 billion from continuing operations, or $2.45 a share; Thomson Financial's consensus sought just $2.01 a share. Shares climbed 2.1% to $89.68.

Elsewhere,

NYSE Euronext

(NYX)

and specialty-finance firm

KKR Financial

(KFN)

were respectively climbing 0.8% and 2.2% on positive analyst notes. Piper Jaffray upped the Big Boad to market perform from underperform, citing valuation and positive effects from its recent Euronext purchase. JMP Securities, meanwhile, started coverage of KKR with a strong buy rating.

Bear Stearns

( BSC), on the other hand, was in the red on reports that

Merrill Lynch

( MER)

has seized

$800 million in assets from two struggling Bear hedge funds of which Merrill is a creditor. The funds could shut down now, as Merrill has decided to sell off the assets following a brief reconsideration. Bear and Merrill each were down 1.1%.

Alesco Financial

( AFN), based in Philadelphia, gave up 3.5% to $9.17 after the mortgage-investment firm said it will sell 8 million shares at $9.25 each, along with a 1.2-million-share underwriter's option to cover any overallotments. The per-share price represents a slight discount to Tuesday's close.

Also lagging today were broker

Friedman Billings

(FBR)

, subprime-mortgage lender

Accredited Home Lenders

( LEND) and specialist firm

LaBranche

( LAB), with losses of at least 2%.

More broadly, the

NYSE

Financial Sector Index was lately off 0.3% at 9,855.78 as the KBW Bank Index gave up 0.6%, or 0.7 points, to 116.63.