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Lehman share offering boosts markets

Latest update : 2008-04-02

US stocks shot up the most in two weeks on Tuesday after strong demand for a Lehman Brothers share offering raised optimism that the worst of the credit crisis may be over.

NEW YORK, April 1 (Reuters) - U.S. stocks shot up the most
in two weeks on Tuesday after strong demand for a Lehman
Brothers share offering quelled fears it was headed toward a
fate similar to Bear Stearns and raised optimism that the
worst of the credit crisis may be over.

A $19 billion write-down by Swiss bank UBS AG reinforced
the view that the banks were aggressively scrubbing their
books clean of soured investments tied to the slumping U.S.
housing market. Bank stocks charged higher, with big gains by
JPMorgan Chase & Co, Bank of America and Citigroup helping to
drive both the Dow average and the S&P 500 up more than 3

Technology stocks also had a strong day. The Nasdaq leaped
more than 3 percent, helped by Microsoft, whose shares rose 4
percent after the company said it would not raise its takeover
offer for Yahoo Inc. and was confident in its bid.

"We're getting to the point where poeple are starting to
believe the magnitude of the write-offs is peaking," said Owen
Fitzpatrick, head of the U.S. Equity Group at Deutsche Bank
Private Wealth Management, in New York. "And, it's Lehman
being able to come to market and offer securities. People are
interested in placing capital within financials."

For a second day, traders took solace from economic data
that was not as dire as forecast. The Institute for Supply
Management said its national manufacturing index for March
contracted again, but not by as much as economists had

The Dow Jones industrial average gained 391.47 points, or
3.19 percent, to end at 12,654.36. The Standard & Poor's 500
Index rose 47.48 points, or 3.59 percent, to 1,370.18. The
Nasdaq Composite Index jumped 83.65 points, or 3.67 percent,
to 2,362.75.

Stocks posted their best gains since March 18, the day
that the Federal Reserve's policy makers last cut interest
rates. Tuesday's rally also marked a strong start for the
first day of the second quarter.

Lehman Brothers Holdings Inc's stock jumped 17.8 percent
to $44.34 after the investment bank said it raised $4 billion
of capital in an offering of convertible preferred shares.

That eased investors' anxiety after Bear Stearns nearly
collapsed last month amid a liquidity crisis. The U.S. Fede
ral Reserve encouraged JPMorgan Chase & Co <JPM.N> to take
over Bear Stearns Cos Inc <BSC.N> when it experienced a run on
the Wall Street investment bank last month.

Bear Stearns' stock ended up 3.4 percent at $10.85 on the

JPMorgan's stock, which contributed the most to the
advance of both the Dow and the S&P 500, climbed 9.4 percent
to close at $47.00 on the New York Stock Exchange.

The S&P financial index <.GSPF> surged 7.5 percent, while
shares of Bank of America shot up 7.8 percent to $40.86 and
the stock of Citigroup leaped 11.3 percent to $23.84.

Offering more relief to investors was UBS, which said it
wrote down an additional $19 billion on U.S. real estate and
related assets and unveiled a massive increase in capital.  
Its U.S.-listed shares <UBS.N> surged 14.6 percent to $33.01.

On the Nasdaq, Microsoft rose to $29.49. People familiar
with Microsoft's plans said the company sees no reason to
increase its bid for Yahoo Inc <YHOO.O> two months after it
made a $44.6 billion offer to buy the Internet company.
[ID:N31452651] Yahoo shares fell 1.5 percent to $28.50.

Early in the session, the Institute for Supply Management
said its index of national factory activity edged up in March,
but remained below the level that separates growth from
contraction. Still, it beat expectations, which caused stock
investors to cheer.

Trading was active on the New York Stock Exchange, with
about 1.70 billion shares changing hands, below last year's
estimated daily average of roughly 1.90 billion, while on
Nasdaq, about 2.16 billion shares traded, just below last
year's daily average of 2.17 billion.

Date created : 2008-04-02