* Morgan Stanley (N:MS) profit falls 42 percent in Q3
* European markets struggle after bright start
* China GDP data better than expected
* Dollar a touch higher ahead of ECB meeting
* Wall Street futures point to falls at open
By Patrick Graham
LONDON, Oct 19 (Reuters) - European stock markets struggled
and Wall Street looked set to open lower on Monday after U.S.
bank Morgan Stanley reported a slump in quarterly profit, adding
to signs of woe among the world's biggest banks.
The record third-quarter loss reported by Germany's Deutsche
Bank earlier this month has refocused investors' minds on the
big global banks after a decade of financial strife, regulation
and technology-driven change.
U.S. banks have gained market share in that time but of the
major players to have reported in the third quarter, only Wells
Fargo & Co WFC.N , the biggest mortgage lender, managed a rise
in revenue and income from interests on loans.
Morgan Stanley's profit plunged 42 percent, capping a
generally downbeat quarter for big U.S. banks after investors
fled the bond, currency and commodity markets.
"The Morgan Stanley numbers did not help, and the market is
just a little disappointed that there were no immediate stimulus
measures coming out of China," said Berkeley Futures' associate
director Richard Griffiths.
European and Asian stocks had climbed earlier after slightly
better than expected Chinese growth numbers allayed months of
worry over the slowdown in the world's second-largest economy.
While monthly industrial output numbers were poor and the
third quarter growth figure was the weakest since the 2008
financial crisis, the 6.9 percent reading just beat a forecast
for 6.8 percent and suggested official efforts to stimulate the
economy were working.
"The market has been beset with worries and actually things
are not so bad," said Andy Sullivan, a portfolio manager with
Swiss investment firm GL Financial Group. "Although the start of
the Q3 results have been messy, there are enough positive signs
on earnings growth to keep markets positive. The world is not
ending, things are more or less on track."
The FTSE Eurofirst index of leading European shares was
roughly flat .FTEU3 while Wall Street futures pointed to a 0.3
percent loss on opening.
The tremors emanating from a market slide in China and a
devaluation of the yuan currency in the summer appear to have
largely settled.
While Japan's Nikkei .N225 fell almost 1 percent on Monday
and Shanghai was marginally in the red at closing, MSCI's
broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS is on course for its best month in more than
three years.
Adding to optimism are growing bets that the U.S. Federal
Reserve will delay its first rate hike since 2006 until next
year, encouraging investors to hunt for bargains in beaten-down
Asian equities.
"The market is turning optimistic, against a backdrop of
ample liquidity," said Yang Hai, strategist at Kaiyuan
Securities.
The dollar inched higher against a basket of other major
currencies .DXY , with all eyes on a European Central Bank
meeting later this week, expected to offer some hint of more
stimulus for the economy that may weaken the euro.
The euro fell 0.1 percent to $1.1333 EUR= , down from last
Thursday's high of $1.1495.
Brent crude prices were down around 2 percent, extending a
week of declines LCOc1 to dip back under $50 a barrel.
(Editing by Hugh Lawson)