By Pratima Desai

LONDON (Reuters) - U.S. investment bank Morgan Stanley will close its base metals trading desks globally as part of a plan to cut up to 25 percent of jobs in its fixed income and commodities division, a source at the company told Reuters on Tuesday.

Some jobs in precious metals and energy markets may also go, but the bank is planning to keep a market making presence in these areas because they are more likely to deliver the required profitability and returns.

A spokesman at Morgan Stanley declined to comment.

"Over the past few days we have undertaken a reduction in staffing across fixed income and commodities, with a corresponding reduction in infrastructure and support areas across the firm," an internal memo seen by Reuters said.

"This will result in businesses that are critically and credibly sized for the current market, while maintaining the ability to deliver for our clients across products and geographies."

The source also said that even though the bank would stop making markets in base metals, it would still offer a bespoke service in the sector to banking and corporate clients.

Morgan Stanley is a category 2 or Associate Broker Clearing member of the London Metal Exchange and there are no plans as yet to change that, the source said.

The bank will take a $150 million severance charge in the fourth quarter related to a workforce reduction, the company said earlier on Tuesday.

The charge will cover the cost of cutting jobs of 1,200 employees worldwide, including about 470 employees in Morgan Stanley's fixed-income and commodities division, a source familiar with the matter said.

Earlier this year Castleton Commodities International bought Morgan Stanley's physical oil business, the largest and oldest on Wall Street.

(Reporting by Pratima Desai, Melanie Burton, Clara Denina and Josephine Mason; editing by Louise Heavens, Greg Mahlich)