HSBC shares rose 2 percent to 883 pence ($17.26). The bank did not release results for its first quarter, but is scheduled to report first-half earnings in August.

The report of higher first-quarter profit "is a claim few banks in Europe will be able to make, we believe," said Alex Potter, analyst at Collins Stewart.

"The outlook statement is very muted but this is hardly a surprise, whereas the U.S. performance was well above worst fears," Potter added. "HSBC remains a safe haven and core holding for us."

The write-down compared with a reduction in value of $1.6 billion (1 billion euros) in the first quarter of 2007 and $4.6 billion (3 billion euros) in the fourth quarter of last year.

The outlook in the United States this year is downbeat, Group Chairman Stephen Green said.

"It seems increasingly likely that the U.S. will enter a recession in 2008, the length and depth of which is uncertain. The timing of any recovery in the U.S. housing market, which is likely to be the primary stimulus in restoring confidence to the U.S. economy, is also unclear," he said.

"While illiquidity in financial markets remains of continuing concern, the major economic risks facing the global economy now include inflationary pressures, particularly from rises in food and energy prices," he added.

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On the Net: http://www.hsbc.com/1/2/investor-relations