NEW YORK — Morgan Stanley averted disaster with a $9 billion lifeline from a major Japanese bank, and yesterday declared it will use that money to pick off smaller rivals.

Just a few days ago, some on Wall Street openly questioned if the embattled investment bank would be the next to collapse amid a deepening global credit crisis. Now, Morgan Stanley appears emboldened by the 21 percent stake taken by Japanese lender Mitsubishi UFJ — and, for now, seems to have regained the market's confidence.

Investors poured back into Morgan Stanley shares, which last week plunged 60 percent. Shares recouped $8.42, or 87 percent, to close at $18.10.

"This is Darwinism finance, literally the survival of the fittest for the banks," said Chris Johnson, chief investment strategist at Johnson Research Group. "This is Wall Street's version of 'The Amazing Race' where these companies are going to jump through hoops and rings of fire to rebuild their businesses as quickly as possible."

The closing of the Morgan Stanley deal, which was agreed upon last month, came as Spain's Banco Santander SA said it was in talks to acquire Pennsylvania's Sovereign Bancorp Inc. Forging ahead with similar takeovers appears to be exactly what John Mack, Morgan Stanley's chairman and chief executive, plans to do now that the nation's No. 2 investment bank is on more solid footing.

Mack laid out his plan by telling employees in a memo that he "will be looking at acquisitions that might make sense for the firm." Since Morgan Stanley has now converted its structure to a safer retail bank model, the firm wants to expand its network of 500 branches and 8,500 financial advisers.

Analysts believe he will scour the market, looking for faltering retail banks around the country. And with the buyouts of Wachovia Corp. and Washington Mutual Inc. in recent weeks, it appears Morgan Stanley won't have a problem finding a target.

That's not to say the investment bank is out of the woods. Its book value, the company's total assets minus liabilities, still remains stunningly low.

Also, there still remains reluctance on the part of banks to do business or borrow from one another as the credit crisis deepens. The U.S. government hopes to boost struggling financial companies through a $700 bailout plan, of which some of the money would be used to recapitalize hobbled U.S. banks through direct investments.

But, for the most part, analysts appeared relieved.

"Worst case, if confidence does not return, we believe Mitsubishi would likely step in to protect its investment by buying a majority stake in Morgan Stanley," said James Mitchell, an analyst with Buckingham Research Group.