In another boost to confidence on Wall Street, Morgan Stanley, the investment bank, reported a profit of $1.5 billion for its first quarter Wednesday, surpassing analyst estimates and further easing investor fears of another investment bank failure following the collapse of Bear Stearns.

The firm reported earnings of $1.6 billion or $1.45 a share, down from from $2.66 billion or $2.51 a year ago, a 42 percent decline that was cheered by investors who pushed the stock up 8 percent at the markets opening. Revenue declined 17 percent to $8.3 billion from $10 billion a year earlier.

Morgan Stanley, unlike Lehman Brothers, was not a focus of investor concerns in recent days given its diversified line of businesses. Still its stock, along with other investment banks dropped sharply last week as unease about exposure to illiquid mortgage-related securities peaked.

Morgan Stanley reported record revenue in its institutional securities division, a unit that has attracted scrutiny after last years unexpected $9.4 billion charge for risky, failed trades. The institutional division reported a pretax profit of $2.1 billion, compared with a loss of $6.4 billion last quarter. Strong performance in commodities and currency trading spurred results there.

The firms bread and butter equities business also shined, with revenue increasing 51 percent compared with last year, driven by derivatives and its hedge fund business.

The results should ease some of the recent investor pressure on the chief executive John J. Mack, who has been criticized by an activist group, CtW, for the misguided investments that led to last years write-down. The group has called for Mack to step down as chairman.

“Despite turbulent markets, Morgan Stanley achieved strong performance across many of our businesses this quarter,” Mack said in a statement.

“While many of our businesses are facing challenging market conditions that we expect to continue in the months ahead,” he said, “we are satisfied with how Morgan Stanley navigated the ongoing market turbulence.”

Since the write-downs last year, the bank has taken aggressive steps to change its approach to risk, including the appointment of Kenneth deRegt, a former fixed income executive at Morgan Stanley, to be the firms chief risk officer, reporting directly to Mack as well as easing its exposure to risky areas like commercial real estate.

The decline in Morgan Stanleys profits was less pronounced than Lehman Brothers and Goldman Sachs, which reported results on Monday that gave comfort to a worried market. Morgan Stanleys net profit for the quarter squeaked by those of its arch rival Goldman Sachs, providing a considerable spur to morale at a firm that has long been frustrated by the perception that the performance gap between Goldman and Morgan Stanley has widened.

Morgan Stanley reported losses of $2.3 billion from mortgage trading positions as well as leveraged loans. The struggles continued at Morgan Stanleys asset management division, which reported a $161 million pretax loss from real estate investments and write-downs on structured investments.

The leader of a pro-Taliban mosque was captured hiding under a burka last night as he tried to escape a siege, while hundreds of his followers reportedly surrendered to the Pakistani government.

Maulana Abdul Aziz was discovered by a policewoman as she searched students fleeing Lal Masjid - the Red Mosque - in central Islamabad, where a two-day showdown with the government has left 16 people dead and 150 wounded. The government claimed that a further 1,000 militants had also abandoned the mosque, enticed by promises of safe passage and 5,000 rupees (41) in pocket money.

But the siege had not collapsed. Heavily armed militants, estimated to number between 1,500 and 4,000, stayed inside the mosque, vowing to fight to the end. Sporadic gunfire erupted as evening fell.

Mr Aziz’s brother, Maulana Abdul Rashid Ghazi, remained at large, offering to negotiate with the government.

Lal Masjid shot to prominence six months ago after indoctrinated students launched an anti-vice campaign that targeted music shop owners and suspected prostitutes in a wealthy Islamabad district. Abdul Aziz was the spiritual leader while Ghazi emerged as its main spokesman. The brothers are sympathetic to al-Qaida and have claimed to have hundreds of suicide bombers at their disposal.

Their campaign embarrassed President Pervez Musharraf. At first he did nothing, saying a violent showdown could spark nationwide violence. But the final straw may have been the abduction of seven Chinese staff at a massage parlour last week. They were freed but China, a key ally of Pakistan, demanded greater security.

After an attack on a checkpoint on Tuesday, the authorities hit back. A gun battle outside the mosque left 16 people dead. Early yesterday the soldiers went in.

“They have no options but to surrender,” said Javed Iqbal Cheema, a government spokesman. “The government is not into dialogue with these clerics.”

Shares of Visa Inc., the credit card giant, jumped sharply as they began trading on Wednesday after the largest initial public offering in American history.

The shares, priced Tuesday at $44 each, were trading near $60 on the New York Stock Exchange shortly before noon. They are listed under the ticker symbol V.

A boon for big banks and Wall Street, the $18 billion public offering was greeted with fanfare in the financial industry but was unlikely to unleash a new wave of initial stock sales given the turbulence in the markets.

Even so, the offering will generate a windfall for Visas thousands of member banks, which own the company. JPMorgan Chase is expected to reap about $1.25 billion, while Bank of America, National City, Citigroup, U.S. Bancorp and Wells Fargo are likely to receive several hundred million dollars each.

Wall Street firms, in the meantime, stand to collect upward of $500 million in underwriting fees from the sale.

“That is a good infusion of capital,” said John Fitzgibbon Jr., the founder of IPOScoop.com, a Web site that tracks the industry. “And its no secret that Wall Street is capital starved right now.”

Shares of Visa were priced above the expected range of $37 to $42. More than 406 million shares are being offered, with an option to add 40.6 million if there is demand. That means the size of sale could reach as much as $19.7 billion.

In going public, Visa is following in the footsteps of its smaller rival MasterCard, whose shares have risen more than 400 percent since its public offering in May 2006. Shares of MasterCard were also up on Wednesday, trading around $214, a gain of about $4 a share. American Express was up slightly at around $44. Discover Financial fell to around $16, a loss of almost 8 percent, after first-quarter profit fell 65 percent from a year earlier.

In contrast to Visa, many companies are struggling to sell stock given turmoil in the markets.

“There are just not the buyers out there in this environment,” said Scott Sweet, a partner at IPOBoutique, an industry research firm. “They are scared by the market volatility.” Just 10 companies went public during the first two months of 2008, according to Dealogic, a financial services research firm. That compares with 50 public offerings in the first three months of 2007.

Analysts say that the market has essentially been closed to companies outside the energy, natural resources and health care industries. Excluding Visa, roughly 190 deals, valued at a combined $37.7 billion, are still in the pipeline, according to IPO Scoop.com data.

Several high-profile initial public offerings have been scrapped or delayed in the last few months, including one for Kohlberg Kravis Roberts Company, the big buyout firm. In all, about 77 percent of all public offerings have been withdrawn or postponed, according to bankers, including one this week by Pogo Jet, a jet charter service.

Many companies that have moved forward with sales have scaled back their offerings. CardioNet, a health care technology start-up which Citigroup is taking public on Wednesday, cut the number of shares it allocated in half and lowered the price after several big shareholders backed out of the offering.

Visa, however, is the biggest player in its industry and has a brand known to nearly everyone with a credit card. Wall Street also understands the companys business.

Visa and MasterCard have prospered as Americans increasingly swipe their cards rather than use cash nearly everywhere. The companies have not been hurt by the credit squeeze, because they do not actually make credit card loans; they merely process transactions for banks that do.

Visa, whose offering is being led by JPMorgan and Goldman Sachs with 17 other banks contributing, has been contemplating such a move for more than two years. In that time, it has bolstered its management team and revamped the company.

Industry observers say investors are complaining that they are being given only a fraction of the shares they requested. “I hear that allocations are being given out with eyedroppers,” Fitzgibbon said.