Financial stocks edged higher Tuesday, as stocks like Washington Mutual ( WM) and National City ( NCC) clawed back from Monday's selloff.

Nat City shares were jumping 3.6% after the troubled bank confirmed it had entered memorandums of understanding with the Office of the Comptroller of the Currency and the Federal Reserve Bank of Cleveland. The bank continued to stress that its financial situation is stable and that there haven't been any major changes at the bank since its $7 billion capital raise. Nat City shares rallied 16 cents to $4.63.

Washington Mutual ( WM) took a 17% beat down on Monday, but ticked up 6.9% to $6.68. Regions Financial ( RF) bounced back from its 10-year low of $13.96 to close at $14.40, an increase of 0.4%.

Wachovia ( WB) shares jumped 4.6% to $19.76. Shares rose despite a Morgan Keegan analysts' suggestion that the Charlotte, N.C.-based bank might need to cut its dividend and raise capital. The analyst pointed out that Wachovia's exposure to California and Florida were the reasons for the pressure on the company.

Separately, value manager Third Avenue was adding to its stake in bond insurer MBIA ( MBI), boosting the stock 2.5% to $5.01. The news follows the recent rating cut by S&P and warning from Moody's Investor Service.

Overall it was a mixed day for financial stocks with the NYSE Financial Sector Index recently gaining 5.72 to 6,888.22.

Lehman Brothers ( LEH) continued its slide, as analysts digested the recent loss announcements, crunched their models and downgraded the investment bank. The analysts said they expect the company to lose money in 2008 after forecasting its first-ever quarterly loss and slashed estimates accordingly. The stock fell another 6.7% to $27.50.

Jeffries Group ( JEF) got a boost after French bank BNP Paribas confirmed it was acquiring Bank of America' s prime brokerage unit. Jefferies had been considering the unit, but dropped out of the bidding. Shares moved up 3.1% to $18.23.

And finally, the big loser for the day was CompuCredit ( CCRT), which plunged 28.3% to $6.30 after the Federal Deposit Insurance Corp. said it expected to charge the credit card company with deceptive marketing and abusive debt collection tactics. FDIC said it would seek more than $200 million in fines and penalties. CompuCredit said the allegations were "untrue and without merit."

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