JPMorgan Chase & Co.'s third-quarter earnings fell 4 percent as the European debt crisis pushed investment banking clients to the sidelines, but results were helped by an accounting gain the bank can take when markets are in turmoil.

Excluding that gain, JPMorgan's earnings dropped about 25 percent. Shares of the second-biggest U.S. bank fell 1.5 percent to $32.70 in premarket trading Thursday.

The results are the first for the quarter from a major U.S. bank and underscore how market turmoil has clobbered investment bank revenue. With stock markets plunging, companies are more reluctant to issue securities or acquire rivals.

The underlying trends are quite subdued for JPMorgan, and I don't see any reason to think they'd be different for Goldman or Morgan Stanley, said Nancy Bush, a bank analyst and contributing editor at SNL Financial.

JPMorgan said earnings were $4.3 billion, or $1.02 per share, down from $4.4 billion, or $1.01 per share, in the same quarter last year. The bank's outstanding share count fell 3 percent because the company bought back stock.

All things considered, we believe the firm's returns were reasonable given the current environment, Chief Executive Jamie Dimon said in a statement.

The results were muddied by adjustments for the market value of the bank's debt, which gave it a $1.9 billion pre-tax gain. When the bank's debt weakens relative to U.S. Treasuries, it can record an accounting gain.

Wall Street analysts had estimated on average that the bank earned 91 cents a share. It was not clear if the bank's results were comparable with that estimate.

JPMorgan bought back $4.4 billion of stock during the quarter.

They are putting their money where their mouth is with the buybacks, said David Dietze, chief investment strategist at Point View Wealth Management in Summit, New Jersey.

It shows a degree of confidence. They don't see a cash crunch. The takeaway here is to be more optimistic about regional bank results but not be jumping up and down about the prospects of Morgan Stanley and Goldman Sachs.

Morgan Stanley and Goldman Sachs Group Inc are due to report third-quarter results next week.

JPMorgan's investment banking fees were down 31 percent from a year earlier to $1 billion. Revenue from stock and bond trading was down 14 percent, not counting the accounting gain from the weakening of the bank's debt.

(Reporting by David Henry in New York, additional reporting by Clare Baldwin; editing by John Wallace)