Global stocks soar on central banks' coordinated action

World sharemarkets surged as central banks around the world moved to shore up the global financial system.

The central banks of the US, Canada, Japan, Europe, the UK and Switzerland together announced a coordinated plan to make US dollar funding cheaper for European banks.

The move cuts the pricing on the existing temporary US dollar liquidity swap arrangements by 0.50 percentage point. The aim is to soothe fears of a cash crunch triggered by Europe's sovereign-debt crisis.

The announcement came after China indicated it would loosen monetary policy by lowering the reserve requirement ratio for its banks and help boost its economy.

The Dow Jones Industrial Average was up 490.05 points, or 4.2%, to 12,045.68 at the close (10am NZ time). It was the biggest one-day rise since March 2009. The index is up 0.8% for November and is now back above the level where it started the year.

Financial stocks rallied strongly, with Morgan Stanley jumping 11%, Citigroup rising 8.9% and Bank of America up 7.3%.

This was despite a downgrading by Standard & Poor's of more than a dozen large banks, including the six biggest US financial institutions.

The S&P 500 index was up 4.3% to 1246.96 and the Nasdaq Composite was also up 4.2% to 2620.34.

Meanwhile, a report on the US labour market showed private-business hiring rose by 206,000 in November, the largest monthly gain this year.

Other positive data for the US economy data showed manufacturing in the Chicago area jumped sharply and a pending home sales index for October also rose faster than forecast.

Other markets: Europe up, Asia down
European markets jumped. The Stoxx Europe 600 index racked up a hefty 3.6% gain to finish November at 240.08.

The UK's FTSE 100 index rose 3.2% to 5505.42, France's CAC-40 index jumped 4.2% to 3154.62 and Germany's DAX advanced 5% to 6088.84.

Earlier, before the central banks’ move, Asian markets ended mostly lower, with miners and banks losing ground on the final trading day of a weak month.

Hong Kong's Hang Seng Index fell 1.5% to 17,989.35, while China's Shanghai Composite Index dropped 3.3% to 2333.41.

Japan's Nikkei Stock Average and Korea's Kospi each declined 0.5%, to 8434.61 and 1847.51 respectively, though Australia's S&P/ASX 200 index managed to shed losses, finishing 0.4% higher at 4119.80.

Commodities: Oil steady, gold rises
Crude futures trimmed gains, dropping below $US101 a barrel after an unexpected rise in US oil inventories.

Light, sweet crude oil for January delivery in New York was up 88USc at $US100.67 a barrel, after hitting a two-month high of $US101.75 a barrel earlier.

January ICE Brent crude was 6USc lower, at $110.75 a barrel, after a high of $US112.03 a barrel.

Gold futures advanced on the central banks’ move. The most actively traded contract, for February delivery, was up $US31.20, or 1.8%, at $US1750.10 an ounce in New York.

December-delivery gold was up $US30.90, or 1.8%, at $US1744.30 an ounce.

Currencies: US dollar drops
The US dollar fell sharply against the euro and the yen on global central banks cutting dollar funding costs in Europe.

The euro jumped to $US1.3435 compared with $US1.3315 late on Tuesday. The dollar was at ¥77.51 compared with ¥77.92, while the euro was at ¥104.13 compared with ¥103.69.

The UK pound bought $US1.5696 from $US1.5596, while the dollar fetched 0.9136 Swiss franc from 0.9208 franc.