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Shares of the third-largest U.S. bank by assets level 9.5 percent, as investors grew increasingly disappointed with a bank that had largely sidestepped the worst of the credit crunch, and analysts cut their weal estimates.

Chief Executive Jamie Dimon has kept JPMorgan profitable even as rivals such during the time that Citigroup Inc (C.N) and Merrill Lynch & Co (MER.N) posted a succession of multi-billion dollar quarterly losses.

"If you're a huge global trading house, it's very hard to hide from the devastation," said Steve Persky, headmost executive at Dalton Investments in Los Angeles.

JPMorgan's shares fell as the broader financial sector dropped. Lehman Brothers (LEH.N) fell 12 percent to $16.21, while Bank of America Corp, (BAC.N) Citigroup, and Goldman Sachs (GS.N) all unrelenting more than 6 percent.

JPMorgan revealed the losses in a regulatory filing late Monday. The bank said trading provisions wish "substantially deteriorated" in the third place, and mortgage-backed securities and loans have weakened.

The New York-based bank also has substantial exposure to credit cards and other consumer debt that looks increasingly capable of being wounded as the U.S. economy grows slowly.

The Financial Times said JPMorgan was under embarrassment to write down pledge assets, in component because of Merrill's settlement to sell $30.6 billion of repackaged debt to a private equity fund at 22 cents adhering the dollar.

As of June 30, JPMorgan held $19.5 billion of primitive and Alt-A mortgage exposure, $1.9 billion of subprime mortgage exposure, and $11.6 billion of commercial mortgage-backed securities (CMBS) exposure, the filing showed.

"These mortgage exposures could be adversely coxcomical by dint of. worsening market terms, further deterioration in the housing market and place of traffic activity reflecting distressed sellers," JPMorgan said. Loss estimates exclude hedging, it said.

Trading results could also be hit if the bank's own debt became more valuable. That could theoretically make it more requiring great outlay to buy back its own debt, resulting in an accounting tax.

Analyst Richard Bove at Ladenburg Thalmann argued that JPMorgan's difficulties raised questions about the reason for the course's current combine of businesses.

JPMorgan, formed end a series of acquisitions over the last decade, was supposed to get consumer banking and capital markets businesses that complemented each other: when one was doing inadequately, the other was supposed to have existence doing well.

"Unfortunately, the first time this concept was tried, it did not work. Both (businesses) seem to be declining in tandem by each other," Bove wrote in a catalogue to clients. Bove cut his estimates for the bank's earnings for 2008 through 2010.

The bank did return calls seeking comment.

JPMorgan shares fell $3.97, or 9.5 percent, to $37.92 on the New York Stock Exchange.

CAUTIOUS OUTLOOK

Last month, JPMorgan posted a smaller-than-expected 53 percent fail in quarterly earnings on resilient stock and bond underwriting revenue but cautioned that the mortgage mart and the economy were getting worse.

In the filing, JPMorgan said that it expected continued credit impairment in its consumer portfolio, requiring more reserves in opposition to losses, during the rest of 2008.

It also said home equity charge-offs could maintain rising this year, while prime and subprime mortgage gin charge-offs would likely rise "significantly." It said more remote mortgage degradation was likely into 2009.

JPMorgan held $16.3 billion of unplaced loans funding buyouts and unfunded commitments for loans as of June 30, the filing said.

"Leveraged loans and unfunded commitments are intricate to hedge effectively, and granting that emporium conditions further deteriorate, additional markdowns may be necessary," it said.

Lehman Brothers Inc analysts on Tuesday cut their 2008 profit forecast for JPMorgan to $2.30 a share from $2.60, moreover kept an "overweight" rating and $50 share price target.

(Reporting by Dan Wilchins in Washington; additional reporting by dint of. Tenzin Pema in Bangalore; Editing by Gerald E. McCormick and Mike Miller, Leslie Gevirtz)