UBS gains power early rise in European shares

European shares rose on Tuesday after UBS unveiled a fresh
attempt to reverse its fortunes and writedowns that were along expected lines,
sending its shares up 6 %.

UBS posted $19 bln in additional writedowns and said it was
hiving off ailing portions of the bank into a separate unit.

The rally in its shares helped offset a decline in oil and
energy shares after crude oil futures fell more than 4 % since Friday.

Banks were the largest net contributor to the rise in the
broader European market, even though Deutsche Bank surprised investors with a
2.5 bln euro ($3.9 bln) writedown, equivalent to more than a third of its 2007
net profit. Deutsche shares were up 0.1 %.

In the first three months this year, the index staged its
largest quarterly decline since the third quarter of 2002 as fallout from the
credit crunch continued and analysts and investors believe the end is not yet
in sight.

“It’s a bit like stamping on an old toothpaste tube.
Every time you think you’ve used it up, some more creeps out,” said Justin
Urquhart Stewart, a director at 7 Investment Management.

“Because of the structure of these businesses … these
things only come back to haunt the banks later on, particularly when assets
that they’re reliant upon are found to be unreliable,” he said.
“Unfortunately, we’ve got a whole selection of toothpaste tubes to stamp
on before we finally know it’s all gone,” he added.

A modest tightening in European credit spreads helped
support the broader market. For more please double click on.

“The UBS news is a bit of a two-edged sword, because
while they’ve reported the big loss, they’ve also done a decent capital raising
as well, that seemed to have struck a chord with the credit market, which is
flowing on to equity as well,” said Sean Maloney, a fixed-income
strategist at Nomura.

At 1005GMT London’s FTSE 100
benchmark is gaining 0.79% at 5,747.40 points, while Paris CAC40 benchmark is
gaining 1.26% at 4,766.24 points and Frankfurt’s
DAX benchmark is gaining 1.53% at 6,635.16 points.