Updated from 1:22 p.m. EDT

Most financial stocks were locked in with the larger market's movements on Wednesday, climbing moderately higher before easing back to the flat-line before midday. Among the standout winners, however, was Citigroup ( C).

The New York-based banking behemoth saw an explosion in trading volume after ESL Investments -- a hedge fund run by Sears Holding chairman Eddie Lampert -- disclosed that it now holds a 15.2-million-share stake in Citi. Shares jumped $2.12, or 4%, to $54.91.

The surge helped hoist the KBW Bank Index -- of which Citi is the second most heavily weighted component -- high above the larger market. The tracker added 1.3% to 117.87 as its heaviest component, JPMorgan Chase ( JPM), also rose 1.8% to $52.98. The much larger NYSE Financial Sector Index, of which Citi and JPMorgan are also members, was up 0.5% to 9,877.58.

Leading the sector's percentage gainers, meanwhile, was International Assets Holding ( IAAC), after the Altamonte Springs, Fla., asset manager turned in its fiscal second-quarter results.

The firm said revenue soared 52.5% year over year to $13 million, while adjusted earnings before interest, taxes, depreciation and amortization vaulted 37.9% to $4.5 million. Net per-share income plunged by 38.5% to 8 cents, but shares still surged 16.1% to $24.

Among other climbing financial stocks today, San Francisco bank Wells Fargo ( WFC) gained 2.3% to $36.22 while mortgage lenders Fannie Mae ( FNM) and Countrywide Financial ( CFC) respectively ticked up 2.2% and 2.1%.

On the losing side, however, Bear Stearns ( BSC) gave up 0.6% to $149.58 after Wachovia lowered the New York broker to market perform from outperform.

New Jersey-based asset manager Asta Funding ( ASFI) shed 4.5% to $38.99 after its first-quarter profit of 85 cents a share, while higher than a year ago, was nonetheless 3 cents short of Thomson Financial's consensus.

ING Group ( ING) said first-quarter earnings declined to $1.19 a share (0.88 euros) from $1.26 last year, though the Dutch-based bank said profits were flat excluding currency effects. Shares lost 1.1% to $44.61.

Also sliding today were ProCentury ( PROS), an insurer, down 9.6% to $16.70; asset manager AllianceBernstein ( AB), off 1.4% to $86.73; and savings bank Sovereign Bancorp ( SOV), slipping 0.9% to $23.66.

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