INSTANT VIEW - Goldman Sachs earnings fall, stock lower

NEW YORK (Reuters) - Goldman Sachs Group (GS.N) said on Tuesday third-quarter earnings plunged 70 percent as one of the worst market slumps ever weighed on banking and trading results.

The largest U.S. investment bank reported net income of $845 million (473.3 million pounds), or $1.81 a share, for the quarter ended August 29, down from $2.85 billion, or $6.13 a share, a year earlier.

Investment banking revenue dropped 40 percent as deal activity dried up. Fixed-income trading revenue plummeted by two thirds from last year, reflecting weak credit and mortgage trading results, while equities trading revenue fell by half.

Net revenue fell by half to $6.04 billion from $12.3 billion.

Goldman Sachs shares fell about 4 percent before the bell Tuesday following the earnings report.

The following is reaction from industry analysts:

STEVE GOLDMAN, MARKET STRATEGIST, WEEDEN & CO., GREENWICH, CONNECTICUT

"Revenues were weaker than expected, and the stock is trading down. All eyes are really on the eye of the storm, which is AIG and the systematic risk it poses to the broader market.

"But it's a tough environment and there are mumblings going on. People wondering whether (the remaining investment banks) should find some partners who can stem their liquidity concerns. They haven't been affected so much today, but they may be tomorrow. It may seem far-fetched, but a lot of things that seemed far-fetched have come to fruition."

MIKE HOLLAND, CHAIRMAN OF HOLLAND & CO, IN NEW YORK:

"This is an heroic effort... (it will) continue to add to the deserved lustre of the reputation of the top management at the firm."

"I think we have probably not seen a more challenging environment than the one that we are going through right now, for them to perform in this manner in this environment is nothing short of heroic."

"I think in this environment it will only reflect on them... Goldman Sachs will not reassure the market other than to show that Goldman Sachs can do a great job in any market environment."

PETER DIXON, ECONOMIST, COMMERZBANK IN LONDON

"It's all about spin isn't it? You look at them and think 'Q3 profit down ... what is good about them?' It's a profit.

"The market seems to generally have a very positive view of Goldman, in contrast to what was happening to Lehman last week. Goldman does have a habit of nudging ahead of expectations so it reinforces the reputation they have on the Street as being a little bit smarter than the average bank."