Financial stocks were blasting off Friday, together with the jubilant broad indices, in a last full-trading-day hurrah before the markets close on Christmas. Trading will end early on Monday.

Leading the skyward surge was First Marblehead ( FMD), which was up some 70% after Goldman Sachs ( GS) agreed to inject the student lender with up to $260.5 million by buying up to 19.99% of the firm's shares outstanding as of the time the deal closes. That kicks off today with a purchase of $59.8 million in securities convertible to shares at $11.24 apiece. Then, upon regulatory clearance, Goldman will buy up to another $200.7 million worth for a $15 per-share conversion price.

Goldman additionally agreed to establish a $1 billion warehouse lending facility for the company. Further, First Marblehead will suspend its dividend "for the foreseeable future" in an effort to preserve its cash levels. First Marblehead shares were jumping $7.65 to $18.89. Goldman was adding 3% at $208.79.

Merrill Lynch ( MER) may also hop on the capital-infusion bandwagon: the troubled New York broker is currently in late-stage negotiations to get as much as $5 billion from Singapore-based Temasek Holdings, according to The Wall Street Journal. Shares gained 1.3% to $55.20.

And Marsh & McLennan ( MMC) was riding high after saying it will eject CEO Michael Cherkasky as soon as it finds a suitable replacement. The company board commented that MMC's financial performance this year "has fallen far short of our expectations," and that the management change "will best enable MMC to move forward and enhance shareholder value." Shares of the insurance broker were up 87 cents, or $3.5%, to $25.76.

In earnings, Asta Funding ( ASFI) climbed 10.2% after the New Jersey-based firm said it made $13.1 million, or 88 cents, in the fiscal fourth quarter. That's lower than last year, but two analysts were looking for only 67 cents a share, according to Thomson Financial. Shares of Asta, which manages consumer receivables, were lately trading at $30.05.

First Horizon National ( FHN) rose 2.6% at $18.82 on a valuation-based upgrade to market perform at Keefe Bruyette. This is despite First Horizon saying its mortgage segment is expected to take a pretax loss this quarter. Largely thanks to homebuilding investments, it also expects to take a loan-loss provision of roughly $150 million.

And, even though Friedman Billings ( FBR) suspended its dividend this quarter and estimated it would take a $38 million hit from the sale or writedown of nonprime mortgages, shares added 4.7% after the firm doubled its share-repurchase authorization to 100 million shares. Slightly under half of the prior authorization had already been fulfilled. Shares were up 14 cents to $3.10.

Finally, New York insurer Navigators Group ( NAVG) tacked on 4.3% on word Standard & Poor's will add the stock to its SmallCap 600 index as of market close on Dec. 31.

Among the rare financial losers today, however, was bond insurer Ambac ( ABK). Fitch Ratings put the company's AAA rating on review for downgrade , saying that it needs about another $1 billion in capital -- or another risk-paring measure -- in order to keep that rating. Fitch cited an updated review of Ambac's exposure to collateralized debt obligations and CDOs squared. MBIA's ( MBI) own disclosure of CDOs-squared exposure crushed its shares on Thursday.

Today, Ambac gave up 4.2% while MBIA saw some mixed trading. Recently, it was losing 1.1% at $19.74.

Elsewhere in negative territory, Deutsche Bank slashed Bear Stearns' ( BSC) 2008 estimates by $2.15 to $9 a share a day after the broker reported a big fiscal fourth-quarter loss .

And Impac Mortgage ( IMH) recently dove 17% on a huge quarterly loss of its own. The struggling Irvine, Calif.-based firm said it hemorrhaged $1.19 billion in the third quarter, or $15.66 a share, due to "dramatically worsening" conditions in the secondary mortgage markets. With adjustments, that comes to $16.3 million, or 21 cents a share. The comparable year-ago figure is a profit of 23 cents a share.

That comes in ahead of estimates, which had called for a 25-cent adjusted loss. Still, shares were trading down to 58 cents.

More broadly, the NYSE Financial Sector Index was rising 90.38 points, or 1.1%, to 8,251.52, and the KBW Bank Index added 0.4% to 88.69 after some mixed trading. The Amex Securities Broker-Dealer index gained 1.9%.