Tue Jan 8, 2008 3:38pm EST
(Recasts first paragraph, adds analyst comment and byline)
By Jonathan Stempel
NEW YORK, Jan 8 (Reuters) - Countrywide Financial Corp (CFC.N: Quote, Profile, Research) on Tuesday denied market speculation it might seek bankruptcy protection, but its shares suffered their biggest decline since the 1987 stock market crash on growing concern the largest U.S. mortgage lender's problems will deepen.
In late afternoon trading, Countrywide shares were down $2.03, or 26.5 percent, at $5.61 on the New York Stock Exchange.
Shares of other mortgage-related companies also slid, including lender IndyMac Bancorp Inc (IMB.N: Quote, Profile, Research) and bond insurers MBIA Inc (MBI.N: Quote, Profile, Research) and Ambac Financial Group Inc (ABK.N: Quote, Profile, Research).
After traders reported rumors of a possible Countrywide bankruptcy, the company issued a statement that "there is no substance to the rumor that Countrywide is planning to file for bankruptcy, and we are not aware of any basis for the rumor that any of the major rating agencies are contemplating negative action relative to the company."