UPDATE 4-MBIA posts huge loss on credit derivatives

(Adds analyst comment, comment from conference call)

By Dan Wilchins

NEW YORK, May 12 (Reuters) - MBIA Inc (MBI.N: Quote, Profile, Research, Stock Buzz), the world's largest bond insurer, posted a quarterly loss of $2.4 billion on Monday as it took charges on billions of dollars of exposure to bonds linked to subprime mortgages.

But MBIA's beaten-down shares rose more than 4 percent as adjusted results beat expectations and the company said new business volumes appear to be rising from the first quarter.

MBIA is suffering as the U.S. housing market deteriorates, lifting expected payouts on repackaged subprime mortgage bonds that the company insures.

The insurer expects the housing market to get worse before it gets better, but it has enough capital to withstand the market getting much worse.

U.S. housing prices have dropped by more than 15 percent from their peaks in June by some measures and mortgage portfolios are performing much worse than expected.

"I don't know what's happening in the mortgage market and that's why we're taking a very cautious approach to the bond insurers," said Jim Ryan, an analyst at Morningstar in Chicago.

Earlier this year, the U.S. stock market tumbled amid concerns the bond bond insurers would suffer big losses and be stripped of their top credit ratings.