By Amanda Cooper
LONDON, April 1 (Reuters) - European shares rose on Tuesday
after UBS <UBSN.VX> unveiled a fresh attempt to reverse its
fortunes and writedowns that were along expected lines, sending
its shares up 6 percent.
UBS posted $19 billion 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 <CLc1> fell more than 4
percent since Friday.
Banks were the largest net contributor to the rise in the
broader European market, even though Deutsche Bank <DBKGn.DE>
surprised investors with a 2.5 billion euro ($3.9 billion)
writedown, equivalent to more than a third of its 2007 net
profit. Deutsche shares were up 0.1 percent.
By 0844 GMT the FTSEurofirst 300 index <> of top
European shares was up 1.4 percent at 1,279.72 points.
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.
The DJ Stoxx index of European banks <.SX7P> was up nearly 2
percent. Barclays <BARC.L> rose 3.7 percent, Credit Suisse
<CSGN.VX> gained 4.3 percent and BNP Paribas <BNPP.PA> rose 2.1
percent.
A modest tightening in European credit spreads helped
support the broader market. For more please double click on
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"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.
FOOD AND DRUGS
Pharmaceutical stocks also rose, led by AstraZeneca <AZN.L>
which jumped nearly 5 percent on a JPMorgan upgrade, while
GlaxoSmithKline <GSK.L> gained 1.6 percent and Novartis
<NOVN.VX> rallied 1.2 percent.
Food producers, led by Unilever <UNc.AS> <ULVR.L>, also
ranked among the top positive weights on the market.
Unilever shares were up 2.5 percent, while Nestle <NESN.VX>
gained nearly 1 percent and Cadbury Schweppes <CBRY.L> rose 1.4
percent.
Commodity stocks limited the rise in the FTSEurofirst 300 as
crude oil fell back towards $100 a barrel and base and precious
metals slid in line with a rise in the dollar.
BP <BP.L>, Total <TOTF.PA> and Royal Dutch Shell <RDSa.AS>
fell between 0.5 and 1.6 percent, while in the mining sector
platinum miner Lonmin <LMI.L> shed 4.2 percent as spot platinum
prices <XPT=> dropped, while Anglo American <AAL.L>, Rio Tinto
<RIO.L> and Xstrata <XTA.L> lost 3.3 percent.
Later in the session, the U.S. Institute for Supply
Management releases its March manufacturing survey, which is
expected to show factory activity contracted for a second month
in a row, according to a Reuters poll.
(Additional reporting by Ian Chua; Editing by Quentin Bryar)
