Merrill, the number three securities firm on the Wall Street, said it added about $2.5 billion of writedowns to the $5 billion it disclosed earlier this month.

Merrill had warned earlier this month that it would post a net loss of up to 50 cents a share because of writing down $4.5 billion in collateralised debt obligations and subprime mortgages and a net $463 million loss on leveraged finance commitments.

Merrill''s stock is the third worst in 2007 among securities firms after E''Trade Financial Corp., which had home-loan losses at its online bank, and Bear Stearns Cos, where two hedge funds lost $1.6 billion of clients'' money. Merrill is down 28 per cent in New York trading.

Goldman Sachs Group Inc., the biggest securities firm by market value, on the other hand, gained 12 per cent. Morgan Stanley, the No 2 securities firm is down 5.9 per cent. Merrill, the third-biggest securities firm, is the only one of Wall Street''s five largest to report a loss from the credit contraction. All the companies are based in New York.

Goldman reported a 79 per cent increase in profit for the three months ended August 31 after betting on a drop in prices of securities tied to home loans. Morgan Stanley said profit from operations fell 7 per cent in the quarter.

Merrill also had to write off $100 million related to First Franklin Financial Corp., a home-lending company that Merrill bought for $1.3 billion on December 30.

The credit markets also forced Merrill to write down the value of leveraged buyout loans that the firm had to make after investors refused to finance them. Those devaluations totalled $463 million, after underwriting fees, the company said in its statement.