Financial stocks fell Monday as investors - concerned about earnings for investment banks and commercial banks - took profits on the rally sparked by last week's announcement that UBS AG would buy the PaineWebber Group.

"People are reacting to the UBS-PaineWebber effect," said Lauren Smith, an analyst at Keefe, Bruyette & Woods Inc. News of the $10.8 billion deal triggered a rally in brokerage stocks, sending shares of Lehman Brothers and Donaldson, Lufkin & Jenrette shares 5% higher and Morgan Stanley Dean Witter shares 3% higher last Wednesday.

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