Zombie Financials Come Alive (C, AIG, FRE, FNM, MET)

Some of the Zombie financials rose from the grave today. Here is the rundown:

Citgroup (NYSE: C) up 7.3%, American International Group (NYSE: AIG) up 12.6%, Freddie Mac (NYSE: FRE) up 7.6%, and Fannie Mae (NYSE: FNM) up 5.9%.

There were rumors circulating that the government, which owns a substantial part of all four firms, will seek to restrict short selling in these names. Also, Citigroup is offering preferred shares as part of its agreement to repay its bank-bailout funds. Strong demand for the preferred shares attracted investors to Citigroup.

Investors were also enthused that AIG may be on its way towards repaying the government sooner than expected. On Monday AIG agreed to a deal with MetLife (NYSE: MET) for its second-largest foreign life insurance business. The deal is valued at $15.5 billion and would give AIG a stake in MetLife.

Shares of these troubled financial firms are also heavily shorted, which can exacerbate upward moves. Today's moves all came on heavy volume. Shares of AIG traded hands more than 57 million times versus an average volume of roughly 11 million. Volume in Citigroup was more than 1 billion versus an average of 525 million.