12:30PM New York - Barclays plc writes down £800 million from investments in volatile risky bets in high-risk U.S. mortgage loans.

Barclays plc reported a pre-tax profit of 1.9 billion pounds during the first ten months of this year despite writing off £800 million in loans related to the U.S. sub-prime mortgage market problems in the month of October.

Sub-prime write-downs at its Barclays Capital investment bank arm now total £1.3 billion inclusive of a £500 million write-down in the third quarter.

Barclays said the write-offs were less than feared adding that Barclays'' Capital profits were ahead of prior year. Barclays released its earnings two-weeks earlier to calm markets and squelch rumors that the bank had lost $10 billion. The bank did not release earnings but issued a ‘trading statement.’

Barclays Capital still had more than £5.3 billion worth of exposure to investments in packages of debt, which includes exposure to U.S. sub-prime mortgages, from £6 billion at the end of June in 2006.

Barclays'' dropped 1.5% or 8p to 525p at close in London, as the FTSE 100 index fell. The stock has taken a battering in recent weeks amid rumors the bank may have to write down as much as $10 billion of losses due to the exposure to the risky U.S. home loans.

Aggregate write-downs on Structured Investment Vehicles and SIV-lites in October were £70 million. The bank said it had no further un-drawn backup liquidity facilities for SIVs or SIV-lites.

Barclays Capital had £7.3 billion in exposure from unsold underwriting positions down from a peak exposure of £9 billion in September.

At the end of October, Barclays Capital''s high-grade exposure net of hedges and subordination was £3.8 billion (versus £5.8 billion in June) after charges and write-downs net of hedges in the third quarter of £0.3 billion and a further £0.4 billion in October 2007.

Barclays Capital''s mezzanine exposure net of hedges and subordination was £1.2 billion in June after charges and write-downs net of hedges in the third quarter of £0.1 billion and a further £0.3 billion in October 2007.

Excluding loans originated through EquiFirst, a U.S. mortgage originator acquired earlier in the year, Barclays Capital warehouse and whole loan positions totaled £4.3 billion in January falling to £0.8 billion in June and £0.4 billion at the end of October.

Strict risk management at Barclays Capital plus diverse revenue streams, as well as strong growth across commodity, equity, currency and interest rate products helped stabilize operations at the unit. The bank said profits from Europe and Asia were also strong.

A combination of higher interest rates and a slow-down in house price growth has had a serious impact on the sub-prime market, which focuses on people with poor or non-existent credit histories.

In recent months, the higher borrowing costs have made it harder for many borrowers on low incomes to meet their mortgage repayments, and homeowners have filed for foreclosures.

UBS, HSBC, Merrill Lynch, Bear Stearns, and Citigroup and others have disclosed losses that total more than $45 billion related to sub-prime lending.