Morgan Stanley's commodities risk fell in the fourth quarter as it faced trading woes similar to the rest of Wall Street, but the No. 2 U.S. investment bank still pipped top rival Goldman Sachs with a higher risk year-on-year.

Morgan Stanley's Value-at-Risk for commodities stood at $26 million in the fourth quarter, down almost 20 percent from the third quarter, like Goldman's.

But compared with a year earlier, when its commodities VaR was at $23 million, the fourth quarter showed an improvement of 13 percent for Morgan Stanley. Goldman's commodities risk fell nearly 40 percent compared with the fourth quarter of 2009.

VaR in an industry measure for how much of a bank's money is at risk on a day for trading a particular asset class.

Morgan Stanley's historical commodities VaR by quarter (in million dollars):

Q4 Q3 Q2 Q1

2010 26 32 29 27

2009 23 25 23 26

2008 27 35 39 38

2007 35 38 34 40

2006 30 33 44 49

(Reporting by Barani Krishnan; Editing by Walter Bagley)

Goldman sachs Morgan Stanley Down