Powered by surging fixed-income revenue, midsize investment bank Jefferies (JEF) beat the Street on Tuesday by revealing a 48% leap in fourth-quarter profits.

Wall Street cheered the stronger-than-expected earnings, sending Jefferies’ shares rallying 3% in premarket action.

The New York-based company said it earned $72 million, or 31 cents a share, last quarter, compared with a profit of $48 million, or 21 cents a share, a year earlier. Excluding one-time items, it earned 35 cents a share, topping forecasts from analysts by 3 cents.

Revenue jumped 37% to $760.6 million, easily beating the Street’s view of $723 million.

Jefferies’ revenue growth was highlighted by fixed income, where revenue soared to $293 million last quarter from just $141 million the year before.

Investment-banking revenue increased a more modest 8% to $283 million.

The earnings beat could bode well for the rest of the industry as Jefferies is the first investment bank to report fourth-quarter results. Larger Wall Street players like J.P. Morgan Chase (JPM) and Goldman Sachs (GS) aren’t scheduled to report earnings until the middle of January.

Earlier this year Jefferies inked a $2.76 billion all-stock deal to be acquired by Leucadia National (LUK), one of the company’s largest shareholders.

“2013 will mark the beginning of a new era for Jefferies,” the company said in a statement. “We believe our imminent merger with Leucadia will result in an even stronger Jefferies, as well as making us even more distinguished from our bank holding company competitors.”

Shares of Jefferies rose 2.58% to $18.71 ahead of Tuesday’s opening bell, putting them on track to extend their 2012 rally of almost 33%.

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