LOS ANGELES - A fourth-quarter $422 million loss reported by Countrywide Financial Corp. on Tuesday did not appear to scare off Bank of America.

"At this point, everything is a go to complete this transaction," Bank of America Corp. chief executive Ken Lewis said at an investor conference in New York.

Countrywide's fourth-quarter earnings fell far short of Wall Street estimates, with a loss that more than doubled what analysts had predicted. But investors didn't run away from the nation's largest mortgage lender Tuesday; instead, they sent Countrywide shares up 36 cents, or 6.5 percent, to close at $6.31.

Stock in Bank of America - which has offered $4.1 billion in stock for Countrywide - rose 74 cents, or 1.8 percent, to close at $41.94.

Calabasas, Calif.-based Countrywide posted its second consecutive quarterly loss as rising home loan delinquencies forced it to boost loss provisions and take impairment charges.

In the third quarter, it reported a loss of $1.2 billion.

The $422 million loss, or 79 cents per share, contrasts with earnings of $622 million, $1.01 per share, during the same period the previous year. Analysts polled by Thomson Financial, on average, had forecast a loss of 30 cents a share for the fourth quarter.

Revenue for the quarter totaled $1.2 billion, down 58 percent from $2.8 billion in the prior-year quarter.

In addition to missing analysts' outlook, the quarterly performance didn't live up to chairman and chief executive Angelo Mozilo's prediction in October that the company would return to profitability in the fourth quarter.

"While considerably improved from the previous quarter, Countrywide's results for the fourth quarter of 2007 were adversely impacted by further credit deterioration across the industry and continued illiquidity in the secondary mortgage markets," Mozilo said in a statement Tuesday.

Bank of America's Lewis said the factors behind Countrywide's fourth-quarter loss were consistent with his bank's analysis of the lender's business and the agreed-upon buyout price.

"Much more important to us is the dramatic improvement in the underlying fundamentals of the mortgage business," Lewis said, noting that both Countrywide and Bank of America have seen a significant increase in loan volume due to the Federal Reserve's recent interest rate cut.

The spread between Countrywide's stock price and the value of Bank of America's offer has remained unusually large - around 20 percent below what each would be worth at the current price of Bank of America stock. That has sparked concerns by some investors that Bank of America may turn its back on the deal or press for a lower price.

Nick Perry, an equities options analyst at Schaffer's Investment Research, suggested that investor uncertainty and a sense that Countrywide's performance can't get much worse might have contributed to the modest surge in Countrywide shares Tuesday.

"There's been so much negativity in the market that I think it's going to be really tough to surpass expectations on the down side," Perry said. "People are expecting the worst, even when you get numbers that are bad."