Morgan Stanley says hard-to-value assets fall

NEW YORK (Reuters) - Morgan Stanley (MS.N) said on Wednesday it had $9 billion fewer assets that were illiquid or hard to value at the close of its latest quarter than it did three months earlier.

According to its quarterly report filed with the U.S. Securities and Exchange Commission, the second-largest Wall Street investment bank classified $69.2 billion of assets as "Level 3" at the end of May, down from $78.2 billion at the end of February.

Morgan Stanley also said it experienced net trading losses on 16 days in its fiscal second quarter ending May 31.

Separately, Morgan Stanley said it is cooperating with government agency requests for documents and information on auction-rate securities, which are long-term bonds whose rates are reset periodically. Other banking companies have received similar requests. The auction-rate market froze this winter, forcing many municipal bond issuers to pay uncommonly high interest rates for several weeks.

(Reporting by Jonathan Stempel; Editing by Andre Grenon)