By Natsuko Waki
LONDON, April 1 (Reuters) - World stocks began the new
quarter on a positive note on Tuesday as revelations of huge
losses at major European banks suggested that financial firms
are coming clean on their woes.
Oil, gold and other commodity prices fell, pushing the euro
-- highly correlated to fluctuations in commodity prices -- down
to a one-week low against the dollar.
Overnight interbank rates for dollar, euro, sterling fell
after a recent series of central bank moves to inject liquidity
eased quarter-end market strains seen last week.
UBS <UBSN.VX> wrote down an additional $19 billion from the
U.S. subprime mortgage crisis, causing a net loss of 12 billion
Swiss francs ($12.03 billion) in the first quarter, and said it
would seek 15 billion francs through a rights issue of shares.
Deutsche Bank <DBKGn.DE> unveiled 2.5 billion euros of
writedowns, equivalent to more than a third of its 2007 net
profit.
The eight-month-old credit crisis has hit the world's major
banks and threatened to damage corporate profits and derail
global economic growth. However, as more banks reveal the extent
of the damage investors believe they can see the light at the
end of the tunnel.
"The one saving grace in this is that banks are acting
quickly to highlight their exposure. The quicker the bad news is
out in the open then the quicker we can start to repair the
problems," said Peter Dixon, economist at Commerzbank.
"Every bank which comes out with a big number nudges us that
much closer to the end of the write-off cycle."
The FTSEurofirst 300 index <> rose 1.5 percent to a
two-week high. MSCI main world equity index <.MIWD00000PUS> was
up 0.1 percent on the day, having lost nearly 10 percent since
the start of the year.
UBS shares rose seven percent, fooling many who had thought
before the market open that the shares would sink.
"They've separated all their toxic waste. If they're going
to finance that then everyone is saying this is the beginning of
the end, this is the last capital increase," a London-based
trader said.
U.S. stock futures <SPc1> were pointing to a firmer open on
Wall Street later. Tokyo stocks rose more than one percent
<>, led by blue chip exporters.
Sentiment also improved in the credit and emerging markets.
The iTraxx Crossover index <ITCRS5EA=GFI>, most-widely watched
indicator for European credit market sentiment, tightened 3
basis points to 570 bps. Emerging sovereign spreads <11EMJ>
tightened 3 bps.
Emerging stocks <.MSCIEF> were steady, while European
government bonds were weaker, with the June Bund future <FGBLM8>
down 40 ticks.
EURO AND COMMODITIES
The euro fell as low as $1.5625 <EUR=>, edging further away
from its record high above $1.59 set in March.
"(A) background negative for European currencies... is the
latest correction in commodity prices. These markets look less
and less stable by the day," Bank of Scotland Treasury said in a
note to clients.
"Our impression is that they are crammed full of real money
allocations hoping/praying that China generates sufficient
demand growth to offset the effect of economic weakness in an
increasingly large proportion of the developed world. This is
despite the repeatedly stated desire of Chinese policymakers to
both slow growth and curb inflation."
U.S. light crude oil <CLc1> was down 0.6 percent while gold
<XAU=> -- a traditional safe-haven asset -- fell to $892.50 an
ounce. Cooper, coffee, sugar, vegetable oils and soybeans -- all
priced in dollars -- also fell.
In the money markets, overnight euro London interbank
offered rates fell almost 13 basis points to 4.05750 percent
<LIBOR>. Overnight rates for dollar, sterling and Swiss franc
also fell.
(Additional reporting by Rebekah Curtis and Amanda Cooper)
