Central banks act to stem euro crisis

Stocks on Wall Street racked up a fourth straight gain after further moves were taken to solve the euro-zone financial crisis.

The European Central Bank said it had decided in coordination with the US Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank to conduct three so-called dollar-liquidity operations with a three-month maturity covering the end of the year.

They said this would pump dollars into Europe's banking system, a move that has taken some immediate pressure off European lenders that have faced trouble borrowing the US currency.

Meanwhile, a new banking scandal emerged when Swiss giant UBS said it would likely post a third-quarter loss after a staff member racked up as much as $US2 billion in losses through what it said was unauthorised trading. UBS shares dropped 11% in Zurich.

On Wall Street, the Dow Jones Industrial Average was up 186.37 points, or 1.7%, to 11,433.10 at the close (8am NZ time).

The industrial, energy and financial sectors led the S&P 500 index up 1.7% to 1209.04. The Nasdaq Composite rose 1.3% to 2607.07.

The gains came despite discouraging US economic news. Initial claims for unemployment benefits in the latest week rose to 428,000, compared with expectations of 415,000.

The Empire State Manufacturing Index for September, an indicator of New York area manufacturing activity, worsened to negative-8.82, compared with expectations of a negative-4.

Other markets: Europe surges, Asia too
European stock markets soared, with banking shares as pressure was taken off their funding problems.

The move helped the benchmark Stoxx Europe 600 index end up 2.0% at 228.69. Banking stocks rallied on the news, with the Stoxx Europe 600 banks index posting a 4.1% gain to finish at 130.96.

The UK's FTSE 100 index closed up 2.1% at 5337.54, while France's CAC-40 index closed 3.3% higher at 3045.62 and Germany's DAX index closed up 3.1% at 5508.24.

Asian stocks also gained as the euro financial crisis eased.

Hong Kong's Hang Seng Index pared early gains to finish up 0.7% at 19,181.50, weighed down by an 18% slide by Esprit Holdings after the apparel exporter posted a near-disappearance of its profit.

The Shanghai Composite Index dipped 0.2% to 2479.05.

Japan's Nikkei Stock Average jumped 1.8% to 8668.86, while Australia's S&P/ASX 200 index advanced 1.7% to 4071.7. Korea's Kospi rose 1.4% to 1774.08.

Commodities: Oil up, gold falls
Oil futures lifted slightly as the euro-zone debt crisis eased and pushed down the US dollar.

Light, sweet crude for October delivery rose 16USc, or 0.2%, to $US89.07 a barrel in New York Mercantile. Brent crude was up $US2.50, or 2%, to $US114.90 a barrel. The Brent October contract expired at the close of trading.

Gold futures slid to their lowest levels three weeks as demand fell.

The front-month September contract fell $US45.00, or 3%, to settle at $US1,778.50 an ounce in New York – the lowest settlement since August 25.

Currencies: Euro lifts on lending moves
The euro surged more than 1% against the US dollar and the yen as the five major central banks moved to offset shortages of dollars at European banks and businesses.

The euro was at $US1.3874, after having touched $US1.3916, compared with $US1.3754 late on Wednesday in New York.

The euro rose to ¥106.55, after having surged to ¥106.93, up from ¥105.40. Against the Swiss franc, the euro was at 1.2055 franc, compared with 1.2046 franc.