Swiss bank UBS (UBS) revealed big damage from exposure to the U.S. subprime crisis, but financial exchange traded funds (ETFs) don’t appear to be bearing the scars.

The company said today that it expects write-downs of about $19 billion, reports Onna Coray for the Associated Press. That brings its total number of write-downs to $40 billion in the last nine months, the largest of any bank to this point. UBS Chairman Marcel Ospel stepped down.

Germany’s largest bank, Deutsche Bank AG (DB), announced a write-down of $4 billion.

Oddly, though, financial ETFs are soaring today. After UBS and Deutsche Bank announced their write-downs, the European banking sector shot up 3%. UBS shares soared more than 6%, and Deutsche Bank shot up more than 3%, reports CNBC. The iShares S&P Global Financials (IXG) is up more than 4.5% today. It holds 1.2% of UBS and 1.1% of Deutsche Bank.

iShares MSCI Switzerland (EWL) and iShares MSCI Germany (EWG) are up about 1.5% so far today. UBS is 5.6% of Switzerland’s fund, while Deutsche Bank is 4.9% of Germany’s.

The financial sector has been given a bit of a revival from U.S. Treasury Secretary Henry Paulson’s proposal for an overhaul of the financial system.

This has got some wondering if the light has appeared at the end of the tunnel. Some are skeptical and feel that the temptation to go bargain hunting should be avoided until next year.

We agree – wait until the sector has steadied some and heads back above its 200-day moving average.

Tags: Europe, EWG, EWL, Financial, Germany, Sector ETFs, Switzerland