NEW YORK (Reuters) -
Morgan Stanley (MS.N) on Wednesday
said quarterly earnings plunged as the ongoing credit crunch
slowed investment banking and fueled trading losses, despite
$1.43 billion of one-time asset sale gains.

The second-largest U.S. investment bank reported income
from continuing operations of $1.03 billion, or 95 cents a
share, for its fiscal second quarter, ended May 30, down from
$2.58 billion, or $2.45 a share, a year earlier.

Net revenue fell to $6.5 billion from $11.5 billion last
year. Analysts on average forecast earnings of 92 cents a
share, according to Reuters Estimates.

A breakdown in debt markets last year continues to hurt
financial companies, which have been forced to write down more
than $400 billion of assets, slash jobs and raise new capital.
Morgan Stanley suffered $9.4 billion of fourth-quarter subprime
trading losses and then reported first-quarter earnings that
fell by half.

Morgan follows rival Lehman Brothers (LEH.N), which on
Monday reported a disappointing $2.8 billion loss. Goldman
Sachs Group (GS.N) on Tuesday said its profit fell by 11
percent amid relatively light losses.

Shares of Morgan Stanley have fallen 24 percent this year,
lagging the Amex Securities Broker-Dealer Index (.XBD) and the
broader S&P 500 Index. The stock fell 4 percent Tuesday, as
investor concerns about further losses and capital raising
weighed on financial companies.

(Reporting by Joseph A. Giannone; Editing by Steve
Orlofsky)

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