Barclays investors led by Sumitomo Mitsui Financial Group Inc. face losses of about 363 million pounds ($726 million) before the U.K. bank's share sale closes tomorrow, Bloomberg News reports.

Sumitomo Mitsui agreed last month to buy 500 million pounds of shares at 296 pence apiece as part of the British bank's 4.5 billion-pound stock sale, Barclays said in a June 25 statement. Japan's third-largest bank faces a paper loss of 60 million pounds after Barclays fell 14 % through yesterday. GLG Partners Inc. and the

Barclays, the U.K.'s fourth-biggest bank, turned to investors to back the offer, bypassing the investment banks that typically underwrite such stock sales. Bloomberg's Europe Banks and Financial Services Index has sunk to a five-year low on concern of additional writedowns by U.K. banks. Barclays may need another 9 billion pounds to absorb credit-related losses, analysts at Citigroup Inc. said last month.

``It's still too early to be investing in bank stocks,'' said Peter Braendle, who helps manage about $60 billion at Swisscanto Asset Management AG in Zurich and owns Barclays shares. ``Unfortunately, the bad news may not be over.'' He said he won't buy the

Barclays offered the stock to investors at a 6.8 % discount to its closing price of 302.63 pence on June 24, the day before it announced the offer. The bank gained 2.4 % to 266.75 pence in London trading today. The sale closes tomorrow at 11 a.m.

``We made this investment with the purpose to build a long- term relationship with Barclays,'' said Chika Togawa, a spokeswoman for Tokyo-based Sumitomo Mitsui. The timing of the investment by Sumitomo Mitsui Banking Corp. ``was not bad'' when valued against Barclays's earnings or book value, she added.

Barclays spokesman Alistair Smith declined to comment, as did officials at the QIA

Barclays Chief Executive Officer John Varley, 52, asked shareholders to back the share sale and so avoid a rights offering, which takes at least six weeks to complete under U.K. rules.

HBOS Plc, Britain's biggest mortgage lender, is separately raising 4 billion pounds in a rights offering guaranteed by Morgan Stanley and Dresdner Kleinwort Ltd. The Edinburgh-based lender has slumped 48 % since it announced the rights offering April 29. The stock is trading below the right offering price, which could force the two underwriters to buy the stock at a loss. Spokesmen for Dresdner Kleinwort and Morgan Stanley declined to comment on HBOS. The HBOS offering closes July 18.

Caijing Magazine, citing people it didn't identify, reported today that China Development Bank's plan to buy new shares in Barclays was rejected by the nation's cabinet. The proposal was blocked by various government departments and by the State Council, the report said.