UBS AG, the European bank hardest hit by the U.S. subprime contagion, fell as much as 3.7 percent in Swiss trading after saying it may face more losses from mortgage securities. UBS declined 1.02 Swiss francs, or 3.4 percent, to 28.92 francs by 3:38 p.m. in Zurich, the biggest slump among the 59 companies on the Bloomberg Europe Banks and Financial Services Index. UBS has dropped 42 percent this year, cutting its market value to 63 billion francs ($61.5 billion). UBS, in the prospectus for its 16 billion-franc rights offer, said the bank's losses on non-U.S. residential and commercial real-estate securities ``could increase in the future.'' UBS is also evaluating whether to limit or discontinue one or more U.S. reference-linked note programs, which ``could result in a charge to income,'' the bank said in the document, released after markets closed on May 23. ``UBS will have to fight against negative news flow for at least several more quarters,'' said Rolf Biland, who helps manage about $3.1 billion, including UBS shares, as chief investment officer at VZ Vermoegenszentrum in Zurich. ``The U.K. housing market is almost as overheated as in the U.S., and could lead to losses for banks.'' U.K. home values fell for an eighth month in May and will probably drop further, Hometrack Ltd., a London-based research company, said today. The average cost of residential property in England and Wales fell 1.9 percent this month from a year earlier, the biggest decline since November 2005. Start of Rights Trading UBS is seeking to replenish capital after about $38 billion in writedowns related to the U.S. subprime crisis. The bank still has more than $45 billion in U.S. mortgage-related assets, $8.6 billion in leveraged finance commitments and $10.4 billion in U.S. student loans on its books. http://www.bloomberg.com/apps/news?pid=20601087&sid=a865nkH0FS7A&refer=home Quelle surprise..:!!!!