Banking stocks closed lower after a volatile session Tuesday after the release of mixed forecasts on employment and consumer spending. The KBW Bank index closed down 0.65%, at 44.30, after dipping as low as 43.90 in early morning trading.

Financial stocks and the overall markets fell after the Commerce Department said the U.S. economy grew less than first reported in the third quarter and consumer spending fell below forecasts. That news was tempered in the afternoon when the Federal Reserve released minutes from its closed-door policy meeting this month, showing that officials believe the economy will grow slowly while unemployment remains high through 2010. They also said interest rates would stay "exceptionally low" for an "extended period."

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