* Nomura's underwriting fees jump on share offering surge
* Nomura controlled 42 pct of equity underwriting market
* Trading gains less than half that of previous quarter
* Shares up 3.8 pct before results, down 15 pct past 6 mths (Recasts, adds analyst comment)
By Junko Fujita
TOKYO, Feb 2 (Reuters) - Nomura Holdings (8604.T) reported its third straight quarterly profit on a jump in fees to manage fundraising by Japanese companies, in a sign its earnings recovery and global expansion plans are on a solid footing.
Nomura, which has expanded in Europe and Asia after buying those regional operations of failed U.S. investment bank Lehman Brothers, is also building its presence in the United States by drawing on the $7 billion in capital it raised last year.
Japan's largest broker, led by Chief Executive Officer Kenichi Watanabe, earned a 10.2 billion yen ($113 million) net profit for the October-December third quarter, a big swing from a 342.9 billion yen loss a year earlier when costs related to the Lehman acquisition peaked.
The result, while short of the 26 billion yen average profit estimate from three analysts surveyed by Thomson Reuters I/B/E/S and depressed by a slowdown in its trading operations, shows Nomura has turned the corner on the Lehman deal.
"The third-quarter profit isn't bad in the sense that the company managed to maintain a profit," said Kiyohide Nagata, a senior fund manager at Invesco Asset Management
"By purchasing parts of Lehman Brothers' businesses and strengthening its U.S. operations, Nomura is successfully gaining a foothold in the global market."
Nomura's investment banking operations turned a profit for the first time in six quarters as it managed a string of public share offerings by firms taking advantage of a recovery in the stock market to replenish their capital.
Japanese firms raised $33.5 billion in share offerings in the quarter, five times the year earlier level. Nomura managed two-fifths of that total, while Morgan Stanley (MS.N) ranked a distant second with a market share of 7 percent.
For a graphic on Nomura's quarterly earnings: link.reuters.com/wup27h
But Nomura's earnings were hurt by a sharp slowdown in trading amid low market volatility and tighter spreads on bonds. Trading gains slumped by more than half from the prior quarter to 66 billion yen.
Nomura's trading slowdown echoed earnings from global rivals JPMorgan Chase & Co (JPM.N), Citigroup Inc (C.N) and Bank of America Corp (BAC.N), all of which reported weakness in their fixed-income trading businesses in the latest quarter.
"Volatility everywhere -- in currencies, interest rates, stocks -- fell. So the environment was very difficult for trading. But as of January trading flow is coming back," Nomura's Chief Financial Officer Masafumi Nakada told a news conference.
Nomura, which has not given a full-year profit outlook, will likely be able to turn a profit this year, Nakada said. The market consensus is for a net profit of 90 billion yen ($992 million), following a record loss of more than $7 billion in the year to March 2009.
Nakada said Nomura has been adding clients in the United States where it has been seeking to expand its operations.
Nomura is aiming to boost headcount in the United States to 1,600 by March from 720 last April, Nomura's Chief Operating Officer Takumi Shibata said in December.
"Nomura's trading gain was much smaller than I had expected but we should blame the market for that," said Tetsuo Majima, senior analyst at Tokai Tokyo Research Center in Tokyo.
"We should look at the fact that it raised money to invest in the U.S. where still a lot of good people are looking for jobs."
Nomura arranged the $12 billion share offering by Mitsubishi UFJ Financial Group (8306.T), the largest stock sale in 2009, as well as public offerings by electronics conglomerate Hitachi Ltd (6501.T) and insurer T&D Holdings (8795.T).
Last week, Japanese rival Daiwa also posted its third straight quarterly profit, though its result was also weaker-than-expected, partly due to trading losses. [ID:nTOE60S070]
Nomura shares closed up 3.8 percent on Tuesday before the announcement, compared with a 2.9 percent gain for Tokyo's brokerage sector subindex .ISECU.T. Nomura's stock has fallen about 15 percent over the past six months, in line with the industry index. (Additional reporting by Yuko Inoue; Editing by Nathan Layne and Jean Yoon)