Morning traders.Market wrap: Co-ordinated action by central...

Morning traders.

Market wrap: Co-ordinated action by central banks to temper the European debt crisis has fuelled a fourth night of gains on Wall Street and set up Australian shares for a positive start.

The December SPI futures contract ended the night session 46 points or 1.1% stronger at 4143 as Australian miners rallied in overseas trade and oil and base metals rebounded.

US stocks kicked higher despite a wave of mostly disappointing domestic economic news as the European Central Bank announced it had agreed with the US Federal Reserve, Bank of England, Bank of Japan and Swiss National Bank to extend loans to European banks struggling with sovereign debt problems. The Dow surged 186 points or 1.66% as a broad rally lifted all 30 of its components. Financials steered the S&P 500 up 1.72% and the Nasdaq added 1.34%.

The ECB's move assuaged fears that the European banking system faces collapse if Greece defaults, which credit markets imply is 98% likely. The co-ordinated action followed signs that European banks were having problems borrowing on the interbank market because of fears about their exposure to Greek debt.

"It's an attempt by the central banks to make sure there's enough liquidity so the markets don't freeze," a director on the corporate currency sales desk at Societe Generale in the US told Bloomberg.

Euro-zone banks soared, with the notable exception of UBS which fell nearly 11% after revealing a US$2 billion hole in its accounts caused by a rogue trader. The rebound in financial shares helped Britain's FTSE rally 2.11%, Germany's DAX 3.15% and France's CAC 3.27%.

The Fed's involvement raised hopes in the US that the Reserve will also give the US economy a kick at next week's meeting. That prospect helped investors look beyond a generally poor set of economic reports last night.

Jobless claims ticked up last week to their highest level since the end of June. Manufacturing in the New York and Philadelphia regions contracted. The only bright light was an unexpected 0.2% improvement in industrial production last month.

Commodity prices were helped by a sharp pullback in the US dollar as the euro rallied. Oil caught a leg-up from the US industrial production data, which offset concerns about the rest of the night's domestic news. Crude for October delivery put on 28 cents or 0.3% at US$89.19 a barrel.

Industrial metals rebounded as risk appetite improved. In London, copper added 1.35%, aluminium 0.8%, lead 1.9%, nickel 2%, tin 0.6% and zinc 1.45%. US copper was recently up 1.6%. The gains helped BHP rally 1.7% in US trade, Rio Tinto 2.6% and Alumina 0.8%.

"We have a 'risk-on' afternoon," a Credit Agricole analyst told Reuters. "Let's see how long that risk'on period lasts for. What we need to see is some constructive, bold decisions being taken over the next few days to turn what is a short-covering rally into sucking in some fresh buying."

Gold fell below US$1,800 for the first time since August as traders decided the risk of a disorderly climax to Europe's debt crisis has abated. Gold for December delivery dropped $35 or 1.9% to US$1,791.50 an ounce. December silver was recently off 60 cents or 1.5% at US$39.94 an ounce.

TRADING THEMES TODAY

CLIMBING THE WALL OF WORRY: Good to see the central banks act overnight to avoid a re-run of the 2008 credit crunch. That takes some of the heat out of the European problem, even if credit markets are telling us that a Greek default is inevitable. Of course there are two ways to view last night's move: the market took the positive "glass half-full" view, but the other is that the ECB is preparing for the worst. In the meantime, our market is being left behind what is turning into a pretty strong recovery on US and European equity markets. Key overseas markets had their highest closes of the week last night; our market would need to pile on more than 120 points today to match those performances. Ain't likely to happen, but we may see a better session than our futures suggest, most likely led by the banks.

ECONOMIC NEWS: Nothing scheduled here today. European finance ministers start a weekend of meetings tonight. US attention will turn to consumer sentiment data, long-term purchases and inflation expectations.

Good luck to all.