Mizuho seeks cash as Asia and Europe banks show losses

By David Dolan and Andras Gergely

TOKYO/DUBLIN (Reuters) - Japan's Mizuho Financial Group joined banks around the world raising new capital on Thursday as lenders from Australia to Ireland warned of tough times ahead in a deepening financial crisis.

Mizuho, Japan's second biggest bank, plans to raise up to $3.1 billion (2.0 billion pounds) after unveiling a $402 million quarterly loss.

It joins a host of banks building a bigger capital cushion to absorb future losses, as earnings are in retreat across the sector in Asia, Europe and the United States and bad debts are set to rise as the credit crisis spreads to the real economy.

Bank of Ireland's profits fell by a third and it cancelled its cash dividend to shore up its capital. The bank said a sharp downturn in Ireland's property market will see losses on bad loans jump next year.

French bank Natixis reported a worse than expected loss late on Wednesday and said its core investment banking unit had endured a torrid October.

The United States said it would not use a $700 billion bailout fund to cleanse bank balance sheets of bad mortgage debt.

U.S. Treasury Secretary Henry Paulson said he preferred instead to focus on buying stakes in banks to encourage them to increase lending.

The move pushed a subprime mortgage index lower late on Wednesday, and could cut the value of structured credit assets held by banks, but analysts said the shift to providing capital rather than taking on bad assets had been clear for some time.