LONDON (AP) — Barclays Group PLC unveiled a £1.3 billion ($2.7 billion) writedown for losses on securities linked to the US subprime mortgage market collapse — less than had been feared — in a surprise trading update yesterday.

Barclays, which was not due to provide an update until later this month, revealed the loss in its Barclays Capital investment unit following investor criticism over its silence and after market rumours over the past week of a much larger writedown weighed heavily on its share price.

Shares in the bank jumped more than six percent after the update showing a £500 million ($1.03 billion) writedown in the July-to-September quarter and a 800 million pound ($1.66 billion) writedown in October.

However, the gains were lost later in the session — the stock closed 0.5 percent at 530.5 pence ($10.86) — as analysts factored in expectations of restricted growth at Barclays Capital next year and ongoing uncertainty in debt markets.

Barclays Capital chief Bob Diamond acknowledged that the market would need much more time to get over recent subprime issues.

"Subprime will be in work-out for a couple of years, there's no doubt about it," he said.

Diamond said there was no risk of further writedowns of Barclays' residential mortgage-backed securities collateralized debt obligations, or CDOs.

Barclays declined to say if it would make additional writedowns from exposure in other parts of its business.

The Barclays statement came a day after HSBC Holdings PLC, Europe's biggest bank, reported that it took a $3.4 billion impairment charge at its U.S. consumer finance division, HSBC Finance Corp.

HSBC also warned that its bad debts could increase if the U.S. housing market weakens further — but like Barclays, reassured investors that third-quarter profits for its global business were ahead of last year.

Barclays said that net income and profit before tax for the 10 months to October 31 beat last year's record results as good performances in Europe, Asia and the UK helped offset problems related to the US crisis in mortgages to borrowers with poor credit histories.

"In announcing as we are very strong performance, indeed record performance, for the first 10 months of the year, I think we're able to give strong reassurance to our shareholders that they have nothing to worry about," said chief executive John Varley.