UBS has settled a long-running fraud case pursued by Germany's HSH Nordbank AG over a $500 million (335.9 million pounds) mortgage investment that turned sour, the Swiss bank said on Tuesday.

"We have settled this litigation, but we aren't making the terms public," a UBS spokesman told Reuters after both parties asked a New York court to end the case.

A spokesman for HSH declined to comment.

HSH had sought to recover $500 million for its alleged "near-total loss" from having bought notes tied to the 2002 transaction, known as North Street Referenced Linked Notes, 2002-4 Ltd, or NS4.

Last March, a New York appellate court found HSH had not been misled into assuming the risk of default on part of an overall $3 billion credit default swap transaction.

HSH had claimed that UBS intended to move securities in and out of the portfolio to minimize its own risk and benefit from pricing inefficiencies, creating a conflict of interest.

HSH, one of the world's biggest shipping financiers, last month asked its public-sector owners to hike their guarantees to 10 billion euros amid a four-year slump in the shipping industry, a second bailout.

HSH, like other regional state-owned German lenders known as landesbanks, lost billions of euros on risky investments in the financial crisis, forcing its owners to prop it up with a capital injection and additional loan guarantees.

UBS, which in December agreed to pay $1.5 billion for taking part in a multi-year interest rate rigging scheme, is still ensnared in numerous court cases, including civil claims over the Libor rigging as well as ones linked to a $2 billion rogue trading incident in 2011.

(Reporting by Andreas Kroner; Additional reporting by Karen Freifeld in New York and Katharina Bart in Zurich; Writing by Katharina Bart; Editing by Jon Boyle)