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).

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) 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) and Atlanta's SunTrust Banks ( STI) 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) 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) 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.

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