GLOBAL MARKETS-Stocks surge as banks rally despite losses

                                
 By Pedro Nicolaci da Costa
                                
 NEW YORK, April 1 (Reuters) - Global stock markets rallied
sharply on Tuesday as solid demand for a Lehman Brothers share
offering assuaged concerns about further financial fallout
despite Swiss bank UBS' announcement of an additional $19
billion in losses.
                                
 Lehman has been haunted by rumors that it would go the way
of Bear Stearns, which came to the brink of bankruptcy before
the Federal Reserve orchestrated a JPMorgan buyout of the firm
last month.
                                
 As the Lehman stock sale eased some of those worries, major
indices surged more than 2.3 percent, with the Dow Jones
industrial average <.DJI> up 284 points at 12,547. U.S.
Treasury bond prices fell, with benchmark 10-year notes
<US10YT=RR> down over a full point.
                                
 The gains in equities came despite news that UBS <UBSN.VX>
took another large hit from the mortgage crisis and Deutsche
Bank<DBKGn.DE>_ revealed write-downs to the tune of 2.5 billion
euros, more than a third of its 2007 net profit.
                                
 "It's a good sign to get these things behind us but we can
walk in another day to somebody announcing losses and have that
be a negative," said Peter Kretzmer, senior economist at Banc
of America Securities.
                                
 Traders' take on the U.S. economy was similar in that they
put a positive spin on otherwise grim news. The Institute for
Supply Management reported a second month of U.S. manufacturing
contraction in March, though the index did beat forecasts by a
fraction, lending further impetus for risk-taking.
                                
 Equities were strong across the globe, with European shares
posting their highest close in more than a month. The
FTSEurofirst 300 <.FTEU3> ended the day 3 percent higher.
                                
 UBS' write-downs reminded investors that Europe is also
suffering from the global credit crisis. That helped the
battered U.S. dollar gain ground against the euro, which was
down 1 percent on the day at $1.5611 <EUR=>.
                                
 The dollar was up 1.7 percent at 1.0133 Swiss francs <CHF=>
after earlier rising more than 2 percent, its best one-day
percentage gain in four years.
                                
 Oil prices CLc1 initially suffered from the dollar's gains,
but three days of losses were enough to lure some buyers. Crude
was steady around $101.50 a barrel.
                                
 Gold, <XAU=> in contrast was still in free-fall, having
tumbled 15 percent to a two-month low after hitting a record
high two weeks ago. It was down 3.5 percent at $899.50 an
ounce.
 (Reporting by Pedro Nicolaci da Costa; Editing by Dan
Grebler)