February 14, 2008 / 4:22 PM / in 10 years

Europe shares drop as Bernanke warns on writedowns

LONDON, Feb 14 (Reuters) - European shares almost wiped out Thursday’s gains led by financial stocks after Federal Reserve Chairman Ben Bernanke said he expected to see more writedowns from investment banks.

Shares in Switzerland’s UBS UBSN.VX, which earlier shocked markets with tens of billions of dollars in new exposure to risky U.S. mortgages, shed over 9 percent and were the top weighted drag on the overall market.

By 1615 GMT the FTSEurofirst 300 index .FTEU3 of top European shares was flat at 1,334.45 points, having risen by as much as 1.3 percent earlier in the day after a flurry of strong corporate earnings.

Bernanke, in his semi-annual testimony to Congress, said he saw no imminent threat that mounting losses from the subprime lending crisis would leave banks insolvent. He said although more writedowns were likely, banks had entered the credit turmoil with strong earnings and healthy balance sheets.

    U.S. benchmark indexes .DJI .SPX .IXIC fell between 0.3 and 1.0 percent. (Reporting by Amanda Cooper)

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