Stocks: Wednesday’s review

Asian stocks fell after Standard & Poor’s reduced credit ratings for lenders including Bank of America Corp., Goldman Sachs Group Inc. and Citigroup Inc. as Europe’s debt crisis cuts the global earnings outlook.

Declines in the region accelerated after Xia Bin, China’s central bank adviser and researcher at the State Council’s Development Research Center, said restructuring of its economy will depend on fiscal policy rather than on a loosening of monetary policies. Inflation is still on a “mild upward” trend due to rising labor costs and resource prices, he said.

Japan’s Nikkei 225 Stock Average (NKY) fell 0.5 percent even after industrial production increased more than analysts expected in October.

Australia’s S&P/ASX 200 index rose 0.4 percent. Hong Kong’s Hang Seng Index fell 1.5 percent, falling 9.4 percent for the month and set to become the second-worst monthly performer in Asia after the benchmark index in Vietnam.

Japanese power producers Hokuriku Electric Power Co. increased 3.6 percent to 1,368 yen, Chugoku Electric Power Co. rose 3.1 percent to 1,309 yen and Kansai Electric Power Co. advanced 2.1 percent to 1,144 yen in Tokyo.

Sumitomo Mitsui dropped 1 percent to 2,089 yen in Tokyo, while HSBC Holdings Plc, a lender that gets about a fifth of its revenue from North America, retreated 2.1 percent to HK$57.45 in Hong Kong. China Construction Bank Corp. and Bank of China Ltd., the nation’s No. 2 and No. 3 lenders, were upgraded to A from A-, joining Industrial & Commercial Bank of China Ltd., the world’s biggest bank by market value, on higher ratings than their U.S. rivals.

Chipmakers fell after Digitimes said contract prices for dynamic random-access memory, the most common chip in computers, dropped almost 8 percent in second half of this month due to sluggish demand. The report cited industry sources in Taiwan.

Nanya Technology sank 6.7 percent to NT$2.36 while Powerchip Technology Corp., a maker of DRAM chips, declined 6.3 percent to NT$1.05 in Taipei. Elpida Memory Inc., a memory-chip maker, dropped 5.6 percent to 368 yen in Tokyo.

BlueScope Steel Ltd., Australia’s biggest steelmaker, fell 3.8 percent today and dropped 47 percent for the month, the steepest in the MSCI Asia Pacific Index, after saying last week it plans to sell new shares at a 34 percent discount to raise money for debt repayment.

European stocks jumped, posting their biggest four-day rally since November 2008, as the Federal Reserve and five other central banks lowered the cost of dollar funding and China cut its reserve ratio for banks.

The Fed, Bank of Canada, Bank of England, Bank of Japan, European Central Bank and Swiss National Bank agreed to reduce the interest rate on dollar liquidity swap lines by 50 basis points and extend their authorization through Feb. 1, 2013.

China said it will cut the reserve requirement ratio for banks by 0.5 percentage points from Dec. 5.

Finance ministers of the 27-nation European Union are meeting in Brussels today to seek agreement on how to temporarily guarantee banks’ bond issuance in order to improve funding conditions for lending. EU leaders agreed last month to provide the guarantees to restore investor confidence in banks.

National benchmark equity indexes advanced in every western-European market except Iceland. The U.K.’s FTSE 100 Index increased 3.2 percent, France’s CAC 40 Index jumped 4.2 percent and Germany’s DAX Index surged 5 percent.

A gauge of European banks, which had earlier declined on S&P rating cuts, jumped 4.4 percent. Barclays, Britain’s second- largest lender by assets, surged 6.7 percent to 180.25 pence. Deutsche Bank, Germany’s biggest bank, soared 6.2 percent to 28.62 pence. Lloyds Banking Group Plc jumped 7.1 percent to 24.83 pence.

BHP advanced 6.2 percent to 1,949 pence. Rio Tinto Group, the world’s second-biggest mining company, climbed 6.4 percent to 3,339 pence. Xstrata Plc jumped 6.5 percent to 1,017 pence. A gauge of mining shares rose 6 percent for the best performance in the Stoxx 600.

BP rose 5 percent to 460.75 pence for the largest contribution to the Stoxx 600 index’s advance.

Grifols SA increased 5.4 percent to 12.01 euros for the biggest jump this year. The stock was rated “buy” in new coverage at Deutsche Bank AG.

U.S. stocks advanced, driving the Dow Jones Industrial Average up the most since March 2009, after six central banks took action on Europe’s debt crisis by making it cheaper for lenders to borrow in dollars.

American stocks joined a global rally. The central banks of the U.S., the euro region, Canada, the U.K., Japan and Switzerland agreed to cut the cost of providing dollar funding via swap arrangements, the Federal Reserve said, and agreed to make other currencies available as needed. China cut the amount of cash that banks must set aside as reserves for the first time since 2008.

In the U.S., companies boosted payrolls in November by the most this year and U.S. businesses expanded at the fastest pace in seven months. Another report showed the biggest gain in home- purchase contract signings in a year. The Fed said the economy expanded at a “moderate” pace in 11 of its 12 districts, led by gains in manufacturing and consumer spending, according to its Beige Book survey released today covering October and the first half of November.

Dow 12,045.68 +490.05 +4.24%, Nasdaq 2,620.34 +104.83 +4.17%, S&P 500 1,246.96 +51.77 +4.33%

Today, JPMorgan added 8.4 percent, the most in the Dow, to $30.97. Bank of America gained 7.3 percent to $5.44. Citigroup rose 8.9 percent to $27.48.

Caterpillar, the world’s largest construction and mining- equipment maker, rose 8.1 percent to $97.88. U.S. Steel surged 15 percent to $27.30. PulteGroup Inc. jumped 8 percent to $6.11, pacing gains in homebuilders.

American Airlines parent AMR Corp. increased 23 percent to 32 cents. The shares tumbled 84 percent yesterday after the company announced a bankruptcy filing.

Cisco Systems Inc. (CSCO) gained 5.4 percent to $18.64. Deutsche Bank AG recommended buying the world’s biggest maker of networking equipment, saying checks suggest datacenter information technology rollouts remain “robust.”

‘At All Costs’

Netflix Inc. slumped 4.5 percent to $64.53. The video- streaming and DVD subscription service was cut to “underperform” from “neutral” at Wedbush Securities Inc., citing rising content costs, continued customer losses and concern about the company’s “growth at all costs business model.”