MORTGAGES - 2 big sub-prime losers shore up their reserves - Swiss bank UBS and top bond insurer MBIA raise outside financing.

Swiss banking giant UBS and No. 1 bond insurer MBIA Inc. on Monday became the latest financial companies to attract money from outside investors to fortify their capital in the face of expected mortgage-related losses.

Similar cash-raising moves were announced in recent weeks by Citigroup Inc., Freddie Mac and E-Trade Financial Corp.

And Los Angeles-based Capital Research & Management Co., one of the country's biggest mutual fund managers, said Monday it boosted its stake in Fannie Mae in October and November as the mortgage finance giant's stock fell as much as 55%.

Of course, the capital injections underscore the deep losses that financial firms have suffered, and the money is in many cases coming at a steep price. And some market experts doubt the sector's recovery is imminent.

Nonetheless, financial shares rallied sharply Monday, pushing the overall stock market up, as investors took comfort in the apparent ability of UBS and others to raise capital. After falling sharply in October and November, an index of financial stocks is up 13% from its recent low on Nov. 26, though it remains down 14% for the year.

"Smart money is beginning to say, 'Wait a second, these great companies were knocked 15%, 20%, 30% off their peaks. I'd like to own some of that,' " said James Glickenhaus, a partner at investment firm Glickenhaus & Co. in New York. "It's selective nibbling, but it takes on a life of its own. It's like, 'Johnny's buying some. Maybe I should, too.' "

UBS announced its $11.5-billion infusion from the government of Singapore and an unidentified Middle Eastern investor at the same time that it disclosed a further $10-billion in write-downs on mortgage-related holdings. But the bank's U.S.-traded shares climbed $1.18, or 2.3%, to $51.66 on the news.

MBIA's shares, meanwhile, rose $3.95, or 13%, to $33.95 after the insurer said private equity firm Warburg Pincus was buying as much as $1 billion in MBIA's common stock.

The infusions say that "maybe these people see value, that maybe conditions aren't as bad" in the financial sector as many had feared, said David Ellison, chief investment officer of the FBR mutual-fund group.