Deutsche Bank warned on Wednesday its biggest money spinner, investment banking, would stay sluggish after a global market crunch pushed the business into the red for first time in half a decade.

Even though the investment bank said the fourth quarter would flag, investors were pleased to escape any nasty surprises in the bank's results.

Its shares rose 3.6 percent to 91.97 euros by 0915 GMT compared with a 0.7 percent rise in the DJ Stoxx European banking index.

The investment bank made a pretax loss of 179 million euros ($258 million) in the third quarter and it said fourth-quarter revenues would be squeezed significantly lower than the all-time highs reached recently as markets stay choppy.

The absence of shock news was in stark contrast to some rivals. Earlier in the week, UBS became the second global player to report a third-quarter loss after Merrill Lynch unveiled an unexpected $8.4 billion in writedowns.

They did a better job than Merrill Lynch, said Andreas Plaesier, an analyst with MM Warburg. But he added: I assume that the financial crisis will also hit investment banking in the first quarter of 2008.

The Frankfurt-based lender made an overall pretax profit of 1.4 billion euros in the quarter, thanks to windfalls from the sale of company stakes as well as offices on Wall Street.

This result, although a fifth lower than a year earlier, is better than Deutsche Bank had predicted a month ago, when it told investors to expect a roughly 1.2 billion euro profit.

Investors are relieved that Deutsche Bank does not have any skeletons in the closet, said one trader.

Unveiling the damage inflicted by weeks of turmoil in debt markets combined with tightening credit, Deutsche Bank said revenues in its corporate and investment bank dipped by more than a half to 1.9 billion euros in the third quarter.

TRADING BUSINESS LOSS

Its prized trading business, a goldmine for the bank in the past but as unpredictable as the financial markets in which it trades, made a loss of more than 800 million euros.

Buying and selling debt products was badly affected by difficult market conditions. Revenues there dipped by more than two thirds to less than 600 million euros.

The third-quarter results were helped by a lower wage bill because Deutsche Bank will pay lower staff bonuses following the recent rocky patch, Deutsche Bank Chief Financial Officer Anthony di Iorio told analysts.

October started out very positively, di Iorio said, though he warned that it was too early to call the full-quarter result.

Societe Generale analyst Alan Webborn said there was still a question mark over the future.

Whatever they have done, they have flattered those results. There is no disclosure, Webborn said.

It's all very well to say that the fourth quarter started well. But it is getting worse, he added.

Deutsche Bank, whose shares have lost more than 12 percent so far this year, said it took one-time hits from the crisis triggered by the subprime mortgage troubles.

Nonetheless, Chief Executive Josef Ackermann stood by its goal of a pretax profit of 8.4 billion euros next year, adding, the proviso that markets needed to remain normal. (Additional reporting by Jonathan Gould and Patricia Nann)

Investment Deutsche Bank Bank of america Merrill Lynch