Shares rally on better bank news

Global shares rallied on Tuesday, led by the financial sector, which was boosted by news of strong demand for Lehman Brothers fund-raising.

Even the news that UBS's losses from the credit crunch had more than doubled to about $37bn (£18.5bn) was seen as giving greater clarity.

The Dow Jones in New York closed up 3.2% or 391.5 points at 12,654.4.

London's FTSE 100 closed up 2.6% with the Dax in Frankfurt rising 2.8% and the Cac 40 in Paris up 3.4%.

Addressing the problem

UBS's write-down is now the largest made by any bank as a result of the credit crisis but the Swiss bank's shares rallied to close up 12.2%.

"The latest news today actually helped," said Rainer Skierka at Bank Sarasin.

"With the clear writedown, the cutting of the risky positions, the bank shows that it has addressed the problem."

UBS announced that it would issue new shares to raise extra capital.

Lehman Brothers had announced on Monday that it was raising extra cash. On Tuesday it said it had made $4bn (£2bn) by issuing preferred shares, in which there had been "substantial interest".