Updated from 2:55 p.m. EDT

The financial sector mostly leapt high above the broader market Tuesday, due in no small part to Fremont General's ( FMT) spectacular gains.

The Santa Monica, Calif., lender soared 40.7% to $10 on word iStar ( SFI) will pay roughly $1.9 billion for Fremont's commercial real-estate-lending business, as well as for a 30% stake in its $6.5 billion commercial-loan portfolio. iStar will also fund up to $4.4 billion in unfunded loan commitments associated with that portfolio. iStar shares gained 3.9% to $47.60.

United Financial Bancorp ( UBNK), of West Springfield, Mass., jumped 7.9% to $15.59 after saying its mutual holding company, which owns about 53.8% of United's shares, will convert to the stock form of organization.

Among other rising financial stocks, Alabama's Peoples BancTrust ( PBTC) traded 7.9% higher to $24.57 after BancTrust Financial ( BTFG) agreed to buy it for $25.50 a share in cash and stock. The deal should close within the year. BancTrust Financial lately added 4.1% to $19.73.

A couple of late-suffering lenders, Doral Financial ( DRL) and NovaStar Financial ( NFI), were up 8.6% and 7.1%, respectively, while Nasdaq Stock Market ( NDAQ) shares added 3.1% to $33.22.

The NYSE Financial Sector Index was accordingly 0.4% higher at 9906.71. The KBW Bank Index fared much worse this morning, sagging under its mostly sinking components, but lately managed to pull ahead slightly to 118.02 thanks in part to SunTrust Banks' ( STI) late-morning recovery. SunTrust shares closed up 1.1% to $90.61.

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