UPDATE 1-Jefferies profit plunges as fixed-income business slumps
* Third-quarter profit falls 83 pct
* Revenue declines 30 pct
* Fixed-income unit revenue slides 85 pct
* Investment banking revenue up 23 pct
Sept 17 (Reuters) - Investment bank Jefferies Group LLC, part of Leucadia National Corp, reported an 83 percent drop in quarterly profit as revenue in its fixed-income business fell sharply.
Net earnings fell to $11.7 million for the third quarter ended Aug. 31 from $70.2 million a year earlier.
Revenue from fixed-income business fell about 85 percent to $33.1 million, while total revenue fell 30 percent to $517 million.
"We experienced a very challenging summer in our fixed income businesses due to the rising rate environment, spread widening, redemptions experienced by our client base which heavily muted trading, and related mark-to-market write downs within our inventory," Jefferies Chief Executive Richard Handler said in a statement.
Yield on 10-year U.S. Treasury has risen to a two-year high as investors await a decision from the Federal Reserve on a possible reduction of its bond-purchase stimulus and clues on how it might manage short-term interest rates.
Investment banking revenue at Jefferies rose 23 percent to $319 million, signaling an improvement in deal-making activity during the quarter.
Jefferies, which kicks off the reporting season for investment banks, is often viewed as an indicator of performance at Wall Street banks such as Goldman Sachs Group and Morgan Stanley.
Jefferies marked down its investment of $16 million in Knight Capital, reflecting a fall in the company's stock price.
Shares of Leucadia were up marginally at $28.40 in afternoon trade on the New York Stock Exchange.