US Markets soar in early trade

US stocks soared Tuesday as investors gained confidence that global banks were coming clean about the full extent of multibillion dollar losses tied to America's housing market downturn.

Wall Street shares gained after Swiss banking giant UBS divulged further hefty losses of 19 billion dollars on mortgage investments tied to subprime US home loans granted to Americans with poor credit.

The Dow Jones Industrial Average rallied 274.55 points (2.24 percent) at 12,537.44 at 1458 GMT after posting modest gains a day earlier.

The other major stock barometers also jumped higher as the tech-laden Nasdaq tech-heavy composite index surged 53.12 points (2.33 percent) to 2,332.22 while the Standard & Poor's 500 index gained 29.74 points (2.25 percent) to 1,352.44.

UBS' writedown of ailing mortgage investments comes after it wrote off 18.4 billion dollars last year, but the Swiss bank said it was moving to raise fresh capital as it ousted its embattled chairman, Marcel Ospel.

The US banking and finance industry is also reeling from the ongoing housing slump which has sparked a related credit crunch.

US investment bank Lehman Brothers said Tuesday it had raised fresh capital of four billion dollars in a special share offering to help bolster its finances which have been squeezed by the credit crunch sweeping Wall Street.

"The significant oversubscription for this deal demonstrates the confidence that investors have in Lehman Brothers," Lehman's chief financial officer, Erin Callan, said of the bank's special share offering.

Bank executives said they had increased the number of special shares offered to four million because of heightened demand from investors seeking to snap up the shares.

Lehman's shares rocketed 10.8 per cent to 41.64 dollars in the wake of its announcement about the special share offering.

"The equity markets continue to be hit almost daily with some new worry over the subprime fallout and its impact on the housing industry and the economy in general," said John Wilson, a co-director of equity strategy at Morgan Keegan.

"The market appears to be looking through the trough, though, if the behavior of the housing and transportation stocks is any indicator," the market analyst said.

Although the housing downtown is showing scant signs of stabilizing and many economists believe the economy has fallen into a recession, some investors are hopeful that the worst may soon be over particularly as the Federal Reserve has slashed interest rates in recent months.

Such rate cuts, under more settled economic times, would be expected to spur economic growth.

Other banking shares also surged as hopes mounted that the industry was beginning to put its mortgage losses behind it.