* 4th-qtr adj EPS $0.35 vs est $0.32
* Revenue up 39 percent to $769 mln
* Fixed-income revenue up 66 percent
By Tanya Agrawal
Dec 18 (Reuters) - Jefferies Group Inc reported a higher-than-expected adjusted quarterly profit as the investment bank benefited from higher earnings from its fixed-income unit, indicating the bond market will drive results at larger investment banks.
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 shares were up 3 percent at $18.79 on Tuesday afternoon on the New York Stock Exchange. Shares of Goldman Sachs and Morgan Stanley were also up 3 percent.
"I do expect fixed income to be an important factor as other investment banks report earnings. Maybe not so much at Morgan Stanley but definitely at other banks like Goldman Sachs," said Michael Wong, analyst with Morningstar Inc.
Jefferies, founded in 1962 in Los Angeles to trade large stock orders away from the New York Stock Exchange, agreed last month to be bought by top shareholder Leucadia National Corp for $2.76 billion in stock.
"Combining our company with an extremely well-capitalized parent will allow us to continue to aggressively add value to our clients," Jefferies said in a statement on Tuesday.
Jefferies said it benefited from a pickup in trading in September thanks to fresh stimulus plans from the U.S. Federal Reserve, and that it was gaining market share from larger rivals. The Fed had unveiled a program to purchase $40 billion in mortgage bonds.
The company's trading revenue more than doubled to $293 million from $141 million a year earlier, helped by strength at its fixed-income business.
Investors have been seeking a safe haven in bond markets as they wait out the uncertainty in global economy that has roiled equities markets.
FICC (fixed income, currencies, and commodities) activities are expected to drive between 50 and 60 percent of aggregate capital market revenue for the largest U.S. trading banks, rating agency Fitch had said earlier this month.
Jefferies said it paid 59.9 percent of net revenue to employees -- in line with previous periods but higher than the 50 percent industry peers generally target.
Net income rose to $72 million, or 31 cents per share, in the fourth quarter from $48 million, or 21 cents per share, a year earlier.
On an adjusted basis, earnings were 35 cents per share.
Analysts had expected the company to earn 32 cents per share, according to Thomson Reuters I/B/E/S.
Revenue for the quarter rose 39 percent to $769 million, above estimates of $722.6 million. Investment banking revenue rose 8 percent to $283 million.