Switzerland's largest bank, UBS , confirmed a first-quarter net loss of 2 billion Swiss francs ($1.76 billion) on Tuesday on the back of yet more writedowns, as client withdrawals continued, and said it remained cautious.

UBS said losses were driven by writedowns on risk positions, in particular 1.9 billion francs on monolines, and by losses at its investment bank.

The markets continue to be unsettled, and we remain cautious on the immediate outlook for UBS, the world's largest wealth manager said in a statement.

Chief Executive Oswald Gruebel, the former Credit Suisse chief who has been pulled out of retirement to bring UBS back to profit, warned last month UBS expected to make a first-quarter loss of 2 billion francs.

Gruebel said the same day that the bank was still facing an uncertain future and announced 8,700 job cuts in a bid to speed up UBS's long-due restructuring and slash costs.

The loss contrasts with competitor Credit Suisse's first-quarter net profit of 2 billion Swiss francs.

UBS also said that its first-quarter performance had been negatively affected by a goodwill impairment of 631 million francs from its sale of Brazilian unit Pactual, and severance costs of 184 million francs.

The bank said it expects about 650 million of restructuring and severance charges in the second quarter.

UBS said its core wealth management and Swiss bank business saw net new money outflows of 23.4 billion francs in the quarter, while its wealth management Americas business saw net new money inflows of 16.2 billion.

Its global asset management business saw net new money outflows slow to 7.7 billion francs.

Risky investments by UBS's investment bank in complex U.S. financial products have forced it to make more than $50 billion in writedowns.

It said it had reduced risks on its balance sheet further in the first quarter, bringing total risk-weighted assets to 277.7 billion francs.

Its Tier 1 ratio, a key measure of financial strength, was 10.5 percent at the end of the quarter, but would have been 11 percent if the effects of the Pactual sale had been included.

The bank had to turn to the Swiss government for help in October and is also at the center of a U.S. investigation into possible tax fraud, which is attracting negative headlines in the United States.

It reiterated a statement it made last month that most of the first-quarter outflows came after it paid a fine to settle U.S. criminal charges in February.

In October, Berne gave the bank a cash injection of 6 billion Swiss francs and the Swiss National Bank agreed to absorb in a special fund some of UBS's toxic assets, which now amount to $40 billion.

($1=1.139 Swiss Franc)

(Reporting by Lisa Jucca; Editing by Karen Foster and Simon Jessop)