The United States drove global equity issuance in the first three months of the year, stealing Asia's crown, after a spate of blockbuster U.S. IPOs backed by private equity firms.

Despite a tumultuous final few weeks which saw unrest in the Middle East and a nuclear crisis in Japan rock worldwide stock markets, global equity issuance rose 12 percent to $189 billion in the first quarter, compared with the same period in 2010.

U.S. issuance accounted for $66.5 billion, or 35 percent, of the capital raised, according to Thomson Reuters data.

Asia in recent years has dominated equity fundraising. In the first quarter, China, excluding Hong Kong, was only the second most-active issuer, making up 15 percent of activity.

What we are seeing is a decoupling, whereby the U.S. seems to be breaking out and surging ahead, leaving Europe in its wake, said Viswas Raghavan, head of international capital markets at JPMorgan Chase & Co in London.

There seems to be greater confidence in the U.S. amid an emerging belief that the worst is behind them whereas in EMEA there are a lot of macro issues ... weighing on the market.

Four of the top 10 IPOs globally were the buyout-backed U.S. share floats of measurement firm Nielsen Holdings , Florida lender BankUnited Inc , pipeline company Kinder Morgan Inc and hospital operator HCA Holdings Inc . The U.S. also had large follow-on share sales by MetLife Inc and Fifth Third Bancorp .

U.S. issuance managed to top Asia, despite the biggest deal of the quarter having been Hong Kong billionaire Li Ka-shing's Hutchison Port Holdings Trust, with a $5.5 billion IPO in Singapore earlier this month.

Hutchison, as well as other big deals such as Kinder Morgan and BankUnited, helped propel Goldman Sachs to its top spot in the investment bank league tables for global equity issuance, with total proceeds of $24.9 billion from 63 deals.

Bank of America Merrill Lynch took second place with $13.6 billion, while Deutsche Bank was a close third with $13.1 billion.

SPOOKED

Unrest in the Middle East and the nuclear crisis in Japan spooked investors at the end of the quarter, causing global stock markets to drop and derailing two of Europe's biggest listings so far this year as well as several deals in Asia.

Tail risk has returned. Few people foresaw the unrest in the Middle East or nobody could have predicted the earthquake in Japan and the knock-on effects, said Craig Coben, head of ECM for EMEA at Bank of America Merrill Lynch.

It is a reminder ... that analysis has its limits and at some level the markets are impossible to predict.

The turmoil may cause some companies that are selling shares in follow-on offerings to speed up the process and do shorter roadshows or use block trades. But there's a difference between accelerating deals and pulling them altogether, and there is unlikely to be long term disruption in global equity capital markets, bankers said.

The market was one headline away from going down 2 percent and because of that investors on the buyside just paused. That's why we saw volumes become light, said Frank Maturo, co-head of equity capital markets for the Americas at Bank of America Merrill Lynch in New York. Are we completely past it? The answer is no. But it appears that we're returning to more normalized levels.

Stock markets have rebounded in the last week, encouraging issuers to test the water for new listings again, and analysts and economists have a positive outlook for global markets according to a Reuters poll.

With every other macro event that we've had after the credit crisis -- for example, concerns with Greece or Italy last year -- it took a long period of time for the markets to digest it and bounce back. Here, it took 2 days . . . I attribute that to the high level of cash that is out there and to an improving outlook for the U.S. economy, said Brian Reilly, head of U.S. equity capital markets for Barclays in New York.

Low interest rates, which have spurred investors to take risks for higher returns, are also likely to continue to keep demand for equity strong.

FOLLOW ON

First quarter volumes, particularly in Europe where IPOs got off to a rocky start with three Russian listings pulled in February, were boosted by follow on offerings.

Follow-ons made up 64 percent of ECM activity globally, the highest amount since the fourth quarter of 2009, as buoyant stock markets at the turn of the year encouraged a flurry of stake sales and rights issues.

The biggest crop of equity deals globally were financial sector deals, which accounted for 27 percent of the market, with volumes boosted by bank rights issues such as a 2 billion euro offering from Italy's Banco Popolare .

Bank capital raising is set to be a key source of ECM business in the coming months with several Spanish savings banks among those looking to tap the markets.

Banks are still going to continue to be an important source of primary issuance because there is an ongoing debate as to the right level of capitalization, said Bank of America Merrill Lynch's Coben.

Repaying crisis-era government lending has also been a major theme which is set to continue.

Despite a lackluster start to the year in Europe, the outlook for the second quarter is more promising, with at least 16 firms looking to list before Easter. A string of successes would provide an important confidence boost to the market.

The much-anticipated mega-float of commodities giant Glencore in London and Hong Kong, which at around $10 billion would be among London's biggest ever IPOs, is also expected in the second quarter.

The United States and Asia also have a full pipeline, with Italian fashion house Prada's $2 billion Hong Kong IPO set to come in late June while Freescale, LinkedIn, Allison Transmission, and Frac Tech are all possible second quarter listings in the U.S.

Prior to the financial crisis, the IPO markets were robust. It appears that we're creeping back to the healthy levels of activity that we saw in 2005, 2006 and the front end of 2007, said Brad Miller, co-head of global equity capital markets syndicate at Deutsche Bank.

(Reporting by Kylie MacLellan in London and Clare Baldwin and Alina Selyukh in New York)