* U.S. stocks slip after weak Morgan Stanley results

* Morgan Stanley profit falls 42 percent in Q3

* Brent crude drops nearly 3 pct, U.S. crude off 2 pct

* Dollar gains ahead of ECB meeting

* China growth data weak but slights beats forecast (Updates to close of European markets)

By Sam Forgione

NEW YORK, Oct 19 (Reuters) - U.S. markets slipped on Monday after poor quarterly results from Morgan Stanley stoked worries over the health of the world’s biggest banks, while data showing weak Chinese economic growth pushed oil prices lower.

European equity markets closed modestly higher, led by gains at Deutsche Bank and pharmaceuticals, though they gave up much of their earlier gains after the release of Morgan Stanley’s results.

Morgan Stanley’s profit plunged 42 percent, capping a generally downbeat quarter for big U.S. banks in recent months, after investors fled the bond, currency and commodity markets. The bank’s shares were last down 6 percent.

The results stoked worries over the state of other big world banks, while the S&P energy index was last down over 2 percent amid the slide in oil prices.

“After three weeks of market gains, any disappointing earnings this morning could indicate that we could be in for some profit-taking,” said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.

MSCI’s broadest index of Asia-Pacific shares outside Japan ended slightly higher, while Japanese and Shanghai shares both ended lower.

China’s economy, the world’s second biggest, grew at the slowest pace in six years in the third quarter, data showed on Monday, making it increasingly likely that Beijing will cut interest rates to spur activity.

While monthly Chinese industrial output numbers were poor and the quarterly growth figure was the weakest since the 2008 financial crisis, the 6.9 percent reading just beat a forecast for 6.8 percent.

OIL DROPS

The reaction in the oil market was negative, with Brent crude down nearly 3 percent and U.S. crude down more than 2 percent, on concerns over slowing growth in China, the world’s largest energy consumer.

Data also showed that Chinese oil demand fell slightly in September, meaning the country’s year-to-date growth was running behind the International Energy Agency’s forecast.

The MSCI world equity index, which tracks 46 key global markets, was last down 0.41 percent, while the pan-regional FTSEurofirst 300 index closed up 0.21 percent, at 1,438.49.

The Dow Jones industrial average was last down 0.19 percent, at 17,182.67. The S&P 500 was down 0.36 percent, at 2,025.74. The Nasdaq Composite was off 11.32 points, or 0.23 percent, at 4,875.37.

Brent crude was last down $1.38 at $49.08 a barrel. U.S. crude was last down $1.14 at $46.12 per barrel.

The euro retreated to a 10-day low against the dollar of $1.1306 as investors focused on a European Central Bank meeting later in the week that could pave the way for further stimulus to boost inflation in the euro zone.

“Any dovish shift in the ECB’s language will be seen as increasing the odds of more stimulus and likely send the euro broadly lower,” said Omer Esiner, chief market analyst, at Commonwealth Foreign Exchange in Washington.

The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.40 percent at 94.918.

U.S. 30-year Treasury yields rose to a nearly one-week high of 2.91 percent, while spot gold prices were last down 0.44 percent at $1,171.75 an ounce. (Additional reporting by Abhiram Nandakumar and Gertrude Chavez-Dreyfuss and Barani Krishnan in New York; Editing by Bernadette Baum)