Analysts and investors had expected weak nine-month data, based on losses stemming from the bank's exposure to US hedge fund Long-Term Capital Management Corp and the bank's own forecast for an after-tax third-quarter loss.

UBS, Europe's biggest bank in terms of market capitalisation, said earlier that its net profit for the nine months fell to 2,600 million Swiss francs ($1.90 billion) from 3,851 million and its pre-tax profit fell by 30 per cent to 3,465 million.

The group's share price opened nearly two per cent lower, but stabilised somewhat to trade about 1.3 per cent lower at 378.50 after the first half hour of trading.

Zuercher Kantonalbank (ZKB) said inits Daily Market Comment that the third quarter after-tax loss of some 911 million francs was higher than it had expected. ZKB had forecast an 835 million franc three-month loss.

UBS said write-offs and allowances for the nine-month period totalled 2,396 million francs. But credit loss expenses fell by 54 per cent to 464 million, due mainly to the fact that 1,923 million of the total 2,396 million were funded through the release of allowances established in earlier periods.

It said 1,537 million of the overall writeoffs and allowances related to Switzerland, with the rest applied to cover higher counterparty and country risks in Russia, Indonesia, South Korea and Latin America.

In addition, UBS said its Warburg Dillon Read investment banking division had a 1998 nine-month pre-tax loss of 1,230 million Swiss francs due largely to its exposure to LTCM and to value adjustments on equity derivative positions.

It said the loss related to LTCM totalled 790 million Swiss francs and the value adjustmentsamounted to 1,010 million francs.

UBS also said in its nine-month statement that economic collapse in Russia and severe setbacks in emerging markets also took their toll.

The bank said that unprecedented volatility on the equity markets and the sudden and dramatic widening of spreads on the bond markets adversely impacted the equities and rates businesses.

On the other hand, revenues from foreign exchange and corporate finance developed positively.

ZKB said in its initial morning comment that Warburg Dillon Read's performance was worse than feared, reflecting the fact market turbulence had a stronger-than-expected impact on trading results.

UBS warned in late September that it expected an after-tax loss for the third quarter of between 500 million and 1.0 billion francs as the result of recent turmoil on world markets.

It also said at that time that it would take a 950 million charge stemming from its involvement with LTCM which was ultimately bailed out by a group of investment and commercialbanks after losing some $4 billion on derivative positions.