Updated from 1:33 p.m. EST with new stock prices

On this last trading day of 2007, the financial sector tiptoed higher in piddling volume along with the major indices. The market will close tomorrow for New Year's Day.

The NYSE Financial Sector Index was up 17.88 points, or 0.2%, to 8,300.68. The narrower KBW Bank Index added 0.3% to 88.58, while the Amex Securities Broker-Dealer tracker was up 0.5% at 207.42.

The first and last of those were each bouyed by Merrill Lynch ( MER). Merrill's shares lost some ground after Britain's The Observer reported that the struggling brokerage is in more cash-infusion talks, this time with sovereign wealth funds in China and the Middle East. A week ago, Merrill announced it will get up to $4.4 billion from Singapore-based Temasek Holdings, as well as $1.2 billion from Davis Selected Advisors, by selling chunks of equity at a discount.

Merrill shares rebounded, though, and were up 71 cents, or 1.3%, to $53.68.

BB&T ( BBT), meanwhile, fell 1.3% to $30.67 after a Deutsche Bank analyst lopped $7 off its price target to $28 and cut down its 2008 earnings estimate to $3.28 a share. The analyst cited worries of higher credit costs, capital markets volatility and net interest-margin pressure.

Elsewhere, Security Capital Assurance ( SCA) sank 1.8% after the financial guarantor announced after the market close on Friday that director Alan Senter had resigned from the company's board effective Dec. 27. He will, however, stay on the board of affiliate XL Capital ( XL). Michael Esposito, meanwhile, resigned as non-executive chairman of XL while continuing on SCA's board. Originally, Esposito was slated to step down in mid-2008.

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