UBS shares up on talk of HSBC takeover bid: traders

ZURICH (Reuters) - Shares in Swiss bank UBS (UBSN.VX) rose nearly 4 percent in early trade on Tuesday and traders referred to market rumors British bank HSBC (HSBA.L) could make a bid for the world's largest wealth manager.

UBS shares were 1.7 percent higher at 22.44 Swiss franc at 3:35 p.m. EDT, having risen to 23 francs earlier, outpacing a 0.5 percent rise in the European banking sector index.SX7P

Market talk that HSBC could bid $80 billion for UBS was behind the rise, traders said.

Both banks declined to comment on the rumors.

"Scurrilous rumors of an $80 billion approach from HSBC. I doubt the Swiss would settle for that though," one analyst, who asked not to be named, said.

UBS, so far Europe's biggest casualty of the global credit crisis triggered by risky U.S. home loans, has reported $37 billion in writedowns of investments and posted a loss of some $11.5 billion in the first quarter.

(Reporting by Sven Egenter)