Updated from 2:10 p.m. EDT

A dollop of negative analyst research Monday helped to drag on the financial sector, which generally traded under the broad indices.

Barclays ( BCS) was among the individual losers in that regard, sinking 3.9% after Bear Stearns cut the Britain-based bank to underperform. The analyst said that Barclays will likely join the crowded ranks of financial stocks feeling the sting of recent credit-market disruptions, given certain consistent negative trends in other big investment banks as revealed through fresh third-quarter results.

Barclays shares closed down $1.98 to $49.37 to weigh on the NYSE Financial Sector Index, which lost 69.65 points, or 0.8%, to 9149.98.

The KBW Bank Index slid even lower -- 1.6% to 106.72 -- partially pressured by losses of 1.5% or more at JPMorgan ( JPM), Capital One ( COF) and Zions Bancorporation ( ZION).

Dime Community Bancshares ( DCOM), meanwhile, was lowered to sell at Stifel Nicolaus. Shares of the Brooklyn, N.Y.-based savings bank were off 80 cents, or 5.2%, to $14.70.

Flagstar Bancorp ( FBC) also dropped after projecting in a conference call that the bank's loan-loss provision will rise by $12 million to $14 million in the third quarter, primarily due to higher rates of delinquencies in its commercial real-estate portfolio.

Flagstar also cited difficulties in selling its non-agency mortgage loans, saying it has "curtailed" the origination of those loans "until such time as the secondary market for those products normalizes." CEO Mark Hammond emphasized that Flagstar sees these challenges as being short term in nature, but shares were down 9.2% at $11.65.

Elsewhere, Reuters reported that Deutsche Bank ( DB) could suffer a hit of up to $2.4 billion (1.7 billion euros) from deflating loan values which, once again, trace back to credit-market woes. Reuters cited sources familiar with the situation. CEO Josef Ackermann had warned last week that broad-market trends will probably impact the bank's third-quarter results. Shares surrendered 2.3% to $126.34.

On the upside, however, KeyBanc upgraded SL Green Realty ( SLG) to buy. The analyst said the real estate investment trust should see peripheral benefits from relatively positive results and outlooks at New York investment banks, since it retains a sizable investment in New York office space and healthy financials will help keep those employment levels stable.

SL Green shares added 3.3% to $112.10. Atlanta's Cousins Properties ( CUZ), another REIT, spiked 6.9% on an upgrade to outperform at Wachovia.

And First Albany ( FACT) jumped 9.1% after the small brokerage announced a $50 million equity investment by a MatlinPatterson affiliate for a 61% stake in the company, to be followed by a name change to Broadpoint Securities Group. Lee Fensterstock was installed as CEO and Peter McNierney was made chief operating officer as three MatlinPatterson partners joined the board of directors. Shares closed at $1.68.