Morgan Stanley's fourth-quarter profit missed expectations as results were hampered by weak trading revenue, sending shares down as much as 2.6 percent. The bank's shares have more than doubled in the past year as Morgan Stanley joined an industry-wide rebound from the financial crisis on the back of a trading boom. The banking industry rebound was powered in large part by a trading boom that bolstered results across the sector.

Morgan Stanley, which missed those trading opportunities during the first half of 2009, joined archrival Goldman Sachs Group in the rally in the third quarter. But a fixed income trading slump weighed on Morgan Stanley's fourth-quarter earnings.

Trading revenue dropped 65 percent to $1.1 billion in the fourth quarter from $3.2 billion in the third quarter. Morgan Stanley reported quarterly net income of $413 million, or 29 cents a share, compared with a loss of $10.5 billion, or $11.35 a share, in the year-earlier quarter.

The results fell short of analysts' expectations, who on average expected a profit of 36 cents a share, according to Thomson Reuters I/B/E/S. The results were hampered by accounting charges related to the appreciation of the value of the firm's debt, which reduced fourth-quarter earnings by $600 million.

Copyright Reuters, 2010