Bank analysts held sway over the market Friday, as gloomy outlooks dragged down most bank stocks.

Keefe, Bruyette and Woods analyst cut earnings estimates on 19 regional banks by a median of 5.6%, as credit markets and residential mortgage markets continue to wreak havoc on banks profits. Shares of First Horizon ( FHN) fell $1.03, or 7% to close at $13.63, hitting a new 52-week low. First Horizon is facing mounting loss reserves as non-performing assets increase.

Other losing banks included Imperial Capital Bancorp ( IMP), which plunged 9.1% to $20.38 and Frontier Financial ( FTBK), which slipped 9.2% to $18.17.

A JPMorgan Chase analyst cut his 2008 earnings estimates for Citigroup ( C), Bank of America ( BAC) and Wachovia ( WB), sending the national banks downward. BofA shares fell 96 cents to $39.41. Shares of Wachovia fell $1.16, or 4.1%, to $27.21.

Citigroup, like BofA and Wachovia, also faces further writedowns in the first quarter, the analyst wrote in the note. Media reports on Friday said Citi was preparing a $4.5 billion five-year note sale. The bank's shares, however, dipped only 28 cents to $24.08.

Other national banks fell in tandem. Washington Mutual ( WM) plummeted $1.32, or 11.5%, to $10.17.

In other banking news, Fifth Third Bancorp ( FITB) is the latest name to surface as a possible buyer for struggling National City ( NCC). Fifth Third ticked up 16 cents to $22.71, while Nat City dropped another 80 cents to $8.99.

The KBW Bank Index was down 2.2% to 82.46. The NYSE Financial Sector Index closed down 65.26 to 7,638.15.

On the positive side, futures broker MF Global ( MF) shot up for the second day in a row to $12.25, a gain of 6.8%. The Bermuda-based company is pursuing financing alternatives that could include the sale of a minority stake in the company or the issuing of longer-term debt, but not a full acquisition of the company, according to The Wall Street Journal. The firm has hired investment bank Lazard to help it with the process.

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