Sector Snap: Regional bank stocks decline

Despite some banks reporting rising losses tied to bad mortgages, financial stocks rallied last week as investors were encouraged by Ambac Financial Group Inc. and Merrill Lynch & Co.'s moves to clean up their balance sheets. This signaled to investors that some troubled financial firms were finally taking the appropriate steps to pare their losses.

But new data from the Commerce Department deflated some of that optimism. Monday's report showed that consumer spending, after adjusting for inflation, declined by 0.2 percent in June, as prices displayed the biggest increase in nearly three decades.

FirstFed Financial Corp. was among the sector's biggest decliners, dropping 90 cents, or 10.3 percent, to $7.85 in afternoon trading. Shares are down 76 percent for the year.

National City Corp. tumbled 18 cents, or 3.6 percent, to $4.87. Shares have traded between $2.99 and $31.58 in the past 12 months.

Fellow Cleveland-based bank KeyCorp also fell, losing 43 cents, or 3.9 percent, to $10.54.

BB&T Corp. shed 3 cents to $29.01, while Marshall & Ilsley Corp. dipped 13 cents to $15.52.

Zions Bancorp added 5 cents to $30.21.