US Markets

U.S. stocks notched a fourth-straight gain after a pledge by central banks to pump dollars into the European banking system spurred investors to snap up equities. Bank stocks led the way higher as the Dow Jones Industrial Average rose 186.45 points, or 1.7%, to 11433.18, closing a hair's width from session highs. Bank of America was the strongest blue chip, rising 4%, followed by J.P. Morgan Chase, which gained 3.1%. The Standard & Poor's 500-stock index gained 20.43 points, or 1.7%, to 1209.11, with all sectors rising.

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The measure's battered financial components jumped 2.6%. The technology-oriented Nasdaq Composite added 34.52 points, or 1.3%, to 2607.07. The Russell 2000 index of small-capitalization stocks posted its first four-day winning streak since early July, rising 9.39, or 1.3%, to 713.51. Smaller stocks are generally viewed as a riskier segment of the market. Investors were encouraged by the decision of five major central banks to arrange three new funding operations aimed at stemming a new liquidity crisis.

The move took some pressure off European lenders that have faced trouble borrowing the U.S. currency. It also underscored the funding predicament those lenders currently face. In corporate news, Morgan Stanley was one of the S&P 500's strongest performers, rising 7.2% after disclosing that Chairman and former chief executive John Mack will step down from its board at the end of the year. UBS dropped 10% after the Swiss bank said it would likely post a third-quarter loss after a staff member racked up as much as $2 billion in losses through what it said was unauthorized trading.

European Markets

European stock markets finished sharply higher Thursday, with financial shares soaring after major central banks announced a coordinated plan to provide dollar loans to banks, while UBS AG slumped after uncovering $2 billion of losses from unauthorized trading. The Stoxx Europe 600 index rose 2% to close at 228.69, outpacing recent gains for shares on Wall Street. Shares of BNP Paribas SA rallied 13.4%, having briefly soared as much as 22% after the European Central Bank and other major central banks said they would conduct new operations to provide dollar liquidity, in coordination with the U.S. Federal Reserve.

Worries over the ability of European banks to borrow dollars have hammered stocks recently, and Moody's Investors Service Wednesday said it was growing increasingly worried about liquidity when it downgraded ratings Societe Generale SA and Credit Agricole. Shares of the two French banks rose 5.4% and 5.9%, respectively, helping lift the CAC 40 index to 3,045.62 at the close. Banks were also higher across the rest of Europe, with Deutsche Bank AG rising 5.8% in Frankfurt and leading a 3.1% gain for the DAX 30 index, which settled at 5,508.24. European markets had already been trading higher following a conference call Wednesday among the leaders of France, Germany and Greece.

French President Nicolas Sarkozy and German Chancellor Angela Merkel insisted Greece will remain part of the euro zone and reportedly received assurances from Prime Minister George Papandreou that the country is determined to meet its obligations. Swiss giant UBS AG, however, slumped 10.8% after the bank said it discovered a $2 billion loss due to unauthorized trading by someone in its investment banking arm, which could result in the bank posting a loss for the third quarter. Retail stocks were among the top European performers Thursday following a couple of strong trading updates. Home-improvement retailer Kingfisher PLC rose 4.8% in London after reporting a 28% rise in first-half profit and saying it will create more than 1,200 new jobs across the U.K. The stock helped drive the FTSE 100 index up 2.1%, finishing at 5,337.54.

Asian Markets

Asia stocks ended mostly higher in choppy trade Thursday, with sentiment buoyed by assurances Wednesday from Germany and France that they remain committed to helping heavily indebted Greece remain a part of the euro zone. Japan's Nikkei Stock Average jumped 1.8%, while South Korea's Kospi rose 1.4%. The Shanghai Composite Index slipped 0.2%. Hong Kong's Hang Seng Index ended up 0.7% in choppy trade, weighed by a 17.6% slide in Esprit Holdings after the fashion retailer reported full-year net profit plunged 98%.

In Tokyo, Elpida Memory, Japan's sole maker of PC memory chips, added 5.0% after the company said it is considering shifting some of its production in Japan to its Taiwan unit over the next year to cope with the yen's strength and weak prices. The Topix iron & steel subindex climbed following an upbeat report by Credit Suisse. Analyst Shinya Yamada said the planned October 2012 merger between Nippon Steel and Sumitomo Metal Industries is likely to result in a cost-efficient steel company that can sustain profit growth, even as economic growth declines.

Nippon Steel tacked on 3.6%, while Sumitomo Metal added 3.8%. Other sector players also rose, with JFE Holdings rising 4.3% and Kobe Steel gaining 3.0%. In China, mid-sized banks fell in active trade on liquidity concerns as they must lock up another CNY70 billion to comply with a new reserve requirement rule, which will be implemented in stages by the central bank between September and February. Shanghai Pudong Development Bank dropped 1.7% and Hua Xia Bank lost 1.4%

Commodities.

Copper closed almost 1% higher on the London Metal Exchange Thursday as equity markets and the euro surged on co-ordinated moves by the European Central Bank and the U.S. Federal Reserve to improve dollar liquidity. LME three-month copper closed the afternoon open outcry at $8,711 a metric ton, up $81 from Wednesday's PM kerb. LME three-month aluminum closed up $15, or 0.6%, at $2,374/ton.

Oil futures advanced Thursday after the world's central banks moved to head off a credit crunch, simultaneously easing euro-zone woes and pushing down the dollar. Light, sweet crude for October delivery settled up 49 cents, or 0.5%, at $89.40 a barrel on the New York Mercantile Exchange.

Brent crude on the ICE futures exchange settled up $2.94, or 2.6%, at $115.34 a barrel. Gold futures slid to their lowest levels in three weeks, as the central banks move to boost liquidity slashed demand for the precious metal as a haven. The most actively traded gold contract, for December delivery, fell $45.10, or 2.5%, to settle at $1,781.40 an ounce on the Comex division of the New York Mercantile Exchange, the lowest settlement since Aug. 25.