Stocks jump after central banks act to boost liquidity

NEW YORK -- Stocks surged Wednesday, the Dow Jones industrial average jumping more than 400 points, after central banks around the world made a surprise move to work together to ease strains on the world financial system.

The European Central Bank, U.S. Federal Reserve, the Bank of England and the central banks of Canada, Japan and Switzerland are taking joint action to make it cheaper for banks to get U.S. dollars if they need them. European bank shares, which have been under severe pressure, jumped almost 10% after the announcement.

There was also positive news on the U.S. jobs front. The ADP National Employment Report showed private companies created 206,000 jobs in November, which was well ahead of forecasts.

And investors liked a move by China's move to reduce bank reserve levels Wednesday to release money for lending and help shore up slowing growth there. Higher growth in China could be crucial for a global economy that's suffering in the wake of the eurozone crisis.

Beijing announced that the amount of money China's commercial lenders must hold in reserve will be cut by 0.5% of their deposits, effective Dec. 5. It was the first easing of monetary policy in three years and analysts expect more.

In the U.S., Tuesday's jump in consumer confidence figures also raised hopes that the world's largest economy is faring better than expected. And Wednesday, the government said workers increased productivity over the summer, though the increase was less than initially thought.

The FTSE 100 index of leading British shares was up 2.9% while Germany's DAX rose 4.3%. The CAC-40 in France was 3.6% higher.

The euro, meanwhile, was up 1.2% at $1.3477.

Earlier, Asian stocks closed lower. Japan's Nikkei 225 index dropped 0.5% to close at 8,434.61. South Korea's Kospi dropped 0.5% to 1,847.51. Hong Kong's Hang Seng dipped 1.5% to 17,989.35.

Contributing: USA TODAY's Matt Krantz; Associated Press