State Street shares up on outlook

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Shares in State Street Corp, which manages about $2 trillion of assets, have risen 7% despite a $279m (Â£141m) write-down for sub-prime losses.

The head of State Street's investment management arm, William Hunt, resigned before the write-down was announced.

The money manager faces legal action from clients who claim that its investments were unsuitably risky.

But shares rose because it predicted better-than-expected profits for the last three months of 2007.

State Street predicts earnings per share of between $1.39 and $1.42, compared with the average analyst prediction of $1.06 per share.

The charge it has taken for exposure to sub-prime mortgages is equivalent to 71 cents per share.

Mr Hunt is entitled to severance and benefits of about $14.1m but cannot work for a competitor for 18 months.

Like many banks, State Street has lost money because it held debt based on US sub-prime mortgages.

Sub-prime loans are offered to people with inferior credit records or unpredictable incomes.

Record defaults on sub-prime products left banks holding assets of uncertain value and many banks have written off large amounts of the debt.