NEW YORK - Morgan Stanley Dean Witter & Co.'s fiscal fourth-quarter profit surged 86%, to a record, as a boom in mergers and stock offerings propelled investment banking and commissions at the second-biggest U.S. securities firm.

Net income for the three months that ended Nov. 30 rose to $1.63 billion, from $879 million a year earlier. Per-share earnings jumped 91%, to $2.84, from $1.49, trouncing Wall Street's average forecast of $1.95 per share. Morgan stock is up 85% this year.

Morgan Stanley was No. 2 in advising on the $3.1 trillion of mergers announced in the first 11 months of calendar 1999, which exceeds the record $2.5 trillion in all of last year. A 22% gain in the Nasdaq stock market in the quarter also spurred initial stock offerings - November was the third-biggest month for IPOs.

"Business has never been stronger," said Tim Ghriskey, a portfolio manager at Dreyfus Corp., which owned 1.4 million Morgan Stanley shares as of September. "The question is, can it keep growing at this pace? It's difficult, but we think that financial services in Europe are going to boom" as they have in the United States this decade.

Trading volume on the New York Stock Exchange has more than quadrupled during the decade.

That helps explain why the Standard & Poor's Financial Company Index, of which Morgan Stanley is a member, is the seventh-best industry group in the S&P 500 this decade.

"The challenge is to continue to perform at this level," said Morgan Stanley's chief financial officer, Robert Scott. "It's not reasonable to expect to improve on this."

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