UPDATE 3-Ambac profit boosted by credit derivative gains

* Q3 EPS $7.58 vs loss $8.45 a year earlier

* Accounting gain from credit derivatives $2.13 billion

* Shares up as much as 46 percent (Recasts paragraphs 1 and 2, adds MBIA share rise)

NEW YORK, Nov 4 (Reuters) - Bond insurer Ambac Financial Group (ABK.N: Quote, Profile, Research) posted a quarterly profit of more than $2 billion after accounting gains related to its weakening credit quality, reversing a year-earlier loss and sending its shares up as much as 46 percent.

The value of the company's debt relative to Treasuries fell during the quarter, triggering $2.13 billion in gains from credit protection it sold to customers on complex mortgage securities.

Third-quarter profit totaled $2.19 billion, or $7.58 a share, compared with a loss of $2.4 billion, or $8.45 a share, a year earlier, Ambac reported on Wednesday.

The bond insurer's shares rose as high as $1.62, up 46 percent, in morning trading on the New York Stock Exchange.

Ambac, like its larger rival MBIA Inc (MBI.N: Quote, Profile, Research), has struggled to write new business since losing its top-notch credit rating last year.

Ambac said net premiums earned in the third quarter dropped 16 percent to $238.4 million.