Europe shares flat in choppy trade, UBS sinks

By Amanda Cooper

LONDON, Feb 14 (Reuters) - European shares ended little changed after a volatile session on Thursday after upbeat earnings from the likes of Capgemini (CAPP.PA: Quote, Profile, Research) were offset by losses among banks after UBS (UBSN.VX: Quote, Profile, Research) revealed huge exposure to U.S. mortgages.

The FTSEurofirst 300 index of top European shares ended up 0.1 percent at 1,335.54, having risen by as much as 1.3 percent earlier. The index is on course for its most volatile week since mid-2003.

The market fell in late trade after Federal Reserve Chairman Ben Bernanke said the central bank would have to lower its projections for U.S. growth and warned that more subprime-related writedowns at the investment banks were likely.

UBS shares were the biggest drag, falling by over 8 percent after the company shocked markets with $26.6 billion in exposure to risky U.S. mortgages distinct from subprime loans, increasing its vulnerability to the global credit crisis.

UBS shares have fallen by nearly 30 percent this year.

The broader European market rose earlier in the day, before Bernanke's remarks, after strong earnings from Capgemini (CAPP.PA: Quote, Profile, Research), Europe's largest computer consultancy, and Zurich Financial (ZURN.VX: Quote, Profile, Research).

"Economic conditions in the US have worsened over recent months and credit conditions remain tight," said Steve Cleal, Morley's head of strategy and multi-asset funds.

"Equity markets are expected to remain volatile in the near term and for a sustainable recovery to emerge, investors will require signs that the U.S. economy is beginning to respond to easier monetary conditions."