Financial shares bore the brunt of a wide selloff Thursday as credit-quality concerns, profit warnings, and a spike in oil prices caused by the intensified conflict in the Middle East weighed on investor sentiment.

The American Banker index of top 50 banks was down 4.71%, and its index of 225 banks lost 5.55%. The Dow Jones industrial average and the Nasdaq index fell 3.65% and 2.98%, respectively. Greater Bay Bancorp of Palo Alto, Calif., got an upgraded recommendation from Sandler O'Neill & Partners Thursday, a day after it reported that its third-quarter profit, after a charge, rose 2.5% from the year earlier.

Chris Orgielewicz of Sandler raised his rating to a top-notch "buy," from "outperform," a day after he upgraded the stock from "market perform." Erick J. Reim at U.S. Bancorp Piper Jaffray reiterated his "strong buy," and Joseph K. Morford of Dain Rauscher Wessels and Derek S. Derman at Wedbush Morgan Securities reiterated their "buy" recommendations.

Greater Bay's shares beat the market downturn, rising 18.75 cents, or 0.29%, to close at $64.50.

Elsewhere, the market's performance was dismal; credit-quality questions in particular loomed over the financial stocks.

"We have been mindful of the outlook for asset quality in the banking industry for some time," Thomas F. Theurkauf Jr., an analyst at Keefe, Bruyette & Woods Inc., wrote in a bulletin issued Thursday. "Despite the fact that many banking companies currently trade at a discount multiple, we remain rather cautious on the bank group, particularly those banks with an emphasis on commercial lending."

Mr. Theurkauf, who covers large-cap banks, said that it is not so much the number of bad loans that concerns him as the fact that they are growing while the economy is so strong. He said he assumes the problems go back to 1997 and1998, when underwriting quality at banks deteriorated. "I can't prove it, but I guess that we do see the seasoning effect now," he said.

Rosalind F. Looby of Credit Suisse First Boston wrote Tuesday: "We are still at the beginning of the commercial credit cycle" for mid-cap banks and that she expects loan-loss provisions to rise. "Mid-cap banks may be at greater risk in terms of commercial credit quality, particularly in terms of syndicated loans," she wrote.

A day after Moody's Investors Service downgraded the subordinated debt rating of Zions Bancorp, several equity analysts said they remain generally positive about the company's outlook.

Moody's expressed concerns about the Salt Lake City company's commercial real estate concentration and modest market share outside Utah and Idaho. The bond rating service had upgraded Zions when it was in merger talks with First Security Corp. but put the $21.5 billion-asset regional banking company on review after the deal failed.

Zions earned a "buy" rating from Ms. Looby, who initiated coverage of 17 mid-cap bank stocks Tuesday. Investors should be cautious about the group, "given our concerns about revenue growth and credit quality," she said.

Zions was one of only five banking companies to earn "buy" ratings from Ms. Moody, who said that it "stands out as a bank that intends to capitalize on its position as an institution of the public trust to remain relevant in the online world."

David H. Winton, an analyst at Keefe, said he would have been more concerned if Moody's had based the downgrading solely on asset quality.

Zions shares fell $1.5625, or 3.23%, to close at $46.8125.

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