Morgan Stanley reported better-than-expected adjusted earnings and revenue for the third quarter on Thursday with fixed-income trading providing a boost.

The US bank reported adjusted net earnings of 28 cents per share on revenue of $7.6bn compared to the 24 cents per share and $6.36bn of revenue expected by the FactSet consensus.

Overall, the bank reported a net loss of €1bn after including an accounting charge to reflect debt valuation adjustments. New US accounting rules require earnings to reflect changes in debt value, however these adjustments are volatile and do not reflect a bank's ongoing operations.

Morgan Stanley's revenue had received a boost from fixed-income trading in the quarter. "The rebound in fixed income & commodities sales and trading indicates that clients have re-engaged after the uncertainty of the rating review in the previous quarter," said Morgan Stanley's Chief Executive Officer James Gorman, referring to the bank's two-notch rating downgrade by Moody's in June.

By 10:48 in New York, shares were down 1.41% at $18.22.

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