US banks' earnings beat forecasts

Morgan Stanley said it delivered strong results in investment banking

Morgan Stanley has returned to profit after three quarterly losses in a row, with net income of $757m (£457m) in the July to September period.

Its investment banking division did well, it said, with underwriting revenues up 74% from 2008 levels.

At the same time, the country's fourth-largest bank, Wells Fargo, reported a record $3.2bn profit for the quarter.

Wells Fargo, which bought Wachovia last year, said revenues from mortgages and consumer credit had surged.

Morgan Stanley announced its results two days after agreeing to sell its retail asset management business to investment manager Invesco in a deal worth $1.5bn.

The sale of the loss-making division will allow it to focus more on its institutional clients.

Morgan Stanley's third-quarter profit followed a loss of $159m between April and June.