Geneva  - Shares in UBS tumbled badly Friday, a day after the United States authorities issued a lawsuit against the bank demanding that it hand over about 52,000 names of clients.

However, the Swiss federal administrative court later issued a temporary order banning the transfer of any data to the US until it heard a case brought by UBS clients against handing over their information.

The current investigation in the US of UBS focusses on tax fraud allegations and the demands that it transfer client data, sparking concern in Switzerland for the future of its longstanding principles of banking secrecy.

At one point in early morning trading, the bank's stocks dropped 17 per cent, and ultimately closed the day at 11 Swiss francs, down 14 per cent from its opening price.

The bank, the largest in the Alpine country, said it would challenge the US lawsuit.

"UBS believes it has substantial defenses to the enforcement of the John Doe summons and intends to vigorously contest the enforcement of the summons in the civil proceeding," the bank said in a statement.

The lawsuit was filed a day after UBS said it would pay a hefty fine of some 780 million dollars and hand over the names of the clients who allegedly committed tax fraud.

UBS, with the support of the Swiss regulatory body FINMA, had handed over those names as the allegations are of deliberate criminal acts, but said thousands of other clients would still be protected under Swiss laws.

Reports placed the number handed over at around 250, but there was no official confirmation of the figure.

The temporary ruling by the court would halt the future transfer of data until the eight clients' petition was heard and UBS and others were able to make their statements to the judges. The clients claim there is no legal basis for transferring their data and such a move would cause them harm.

Swiss Finance Minister Hans-Rudolf Merz said Thursday that the country's laws on banking secrecy would remain intact, but bankers were not calmed.

The Swiss media saw the events as the US putting unfair pressure on Switzerland, with some outlets calling it outright "blackmail," though at least one newspaper, the Geneva based Le Temps, said UBS's mistakes in recent years were forcing changes in the country.

The bank was bailed out last year by the government to the tune of about 58 billion dollars.

Also, economy watchers were worried European nations would try to take advantage and get information the Swiss have been keeping locked away.

There was concern that the prize asset of secret banking was being eroded and that eventually the country's financial sector, a backbone of the economy, would be hit hard, leading to job losses and dwindling income.

UBS is accused of willfully helping wealthy US clients commit fraud. The bank said some of its employees engaged in "improper conduct" and officials admitted that the institution had made mistakes.

The drop in stocks comes a week after both UBS and Credit Suisse, the second-largest Swiss bank, reported huge fourth- quarter losses.

UBS's 2008 losses amounted to more than 19.6 billion francs. It has announced job cuts and taken a bailout from the Swiss government.

Friday's stocks tumble went beyond UBS, though. Credit Suisse dropped 9 per cent and other banks also fell. Analysts said this was due to concern for the whole sector. (dpa)