(Bloomberg News) Morgan Stanley rose the most in more than two years in New York trading after reporting a second-quarter loss that was smaller than analysts estimated and the only gain in trading revenue among major U.S. banks.

Morgan Stanley climbed as much as 9.1 percent after posting a net loss of 38 cents a share, smaller than the 61-cent average estimate of 18 analysts surveyed by Bloomberg. A $1.7 billion charge tied to the conversion of Mitsubishi UFJ Financial Group Inc.'s preferred stake in the New York-based firm caused the loss, which compared with profit of $1.09 a year earlier.

Trading revenue rose 14 percent from the first quarter, while Goldman Sachs Group Inc. posted a 47 percent drop earlier this week. The results may help Morgan Stanley Chief Executive Officer James Gorman, 53, convince investors the firm can reach his goals of increasing profitability and gaining market share in trading. The firm's shares are trading below book value, and this week touched the lowest level since March 2009.

"So far as confidence in management and their ability to deliver, delivering good fixed-income results is not only a good bottom line victory, but from a symbolic standpoint it goes a ways toward calming investor fears," Jeffery Harte, an analyst at Sandler O'Neill & Partners, said today in an interview with Bloomberg Television.

The shares climbed $1.91, or 8.8 percent, to $23.63 at 11:42 a.m. in New York Stock Exchange composite trading, the biggest jump since May 1, 2009, and the third-largest gain in the Standard & Poor's 500 Index.

'Very Impressive'

"Morgan Stanley really knocked the ball out of the park," Jason Tyler, senior vice president at Ariel Investments LLC, said today in an interview with Tom Keene on Bloomberg Radio. "This is a very impressive quarter from a revenue standpoint."

The stock was down 20 percent this year through yesterday, after falling 8.1 percent in 2010. That made it the fourth-worst performer in the 81-company Standard & Poor's 500 Financials Index since Gorman took over at the beginning of 2010.

Mitsubishi UFJ last month converted $7.8 billion of outstanding convertible preferred stock in Morgan Stanley into common stock. The move provides Mitsubishi UFJ with a 22 percent ownership interest in the U.S. investment bank and a second seat on its board.

Morgan Stanley agreed in April to increase the number of common shares Mitsubishi UFJ will receive by 75 million to speed up the conversion and eliminate $784 million in annual dividend payments.

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