JP Morgan losses gather momentum

There are few signs that the credit crunch is abating.

JP Morgan Chase, the third-largest US bank, says it has sustained $1.5bn (£0.8bn) in losses related to the sub-prime crisis since the end of June.

That was more than the $1.1bn write-down the bank took on mortgage-linked assets in the April to June quarter.

JP Morgan said trading conditions had "substantially deteriorated" - a sentiment echoed by its rivals.

Wachovia, the fourth-largest US bank, said it lost more money than previously thought in the second quarter.

The bank said its losses for the quarter now totalled $9.11bn, up from the $8.86bn originally reported.

Wachovia will also cut 600 jobs on top of the 6,950 it had previously announced as the housing market deteriorates

Shares in JP Morgan ended 9.5% lower at $37.92 while Wachovia shed 11.9% to $16.04.

Mortgage exposure

Last month, JP Morgan reported that second-quarter profit had fallen 52% to $2bn.

At the end of June, it held roughly $33bn worth of exposure to the mortgage market, including $1.9bn directly related to sub-prime mortgages lent to those with patchy or poor credit histories.

"Mortgage exposures could be adversely affected by worsening market conditions, further deterioration in the housing market and market activity reflecting distressed sellers," the bank said.

The New York-based company, which bought struggling Bear Stearns in May, had been thought to be weathering the credit crunch better than its peers.