UPDATE 1-Black & Decker ratings on review for upgrade-Moody's

(Adds similar S&P action in fifth paragraph)

NEW YORK Nov 2 (Reuters) - Moody's Investors Service said on Monday it may upgrade the ratings of Black & Decker Corp's BDK.N bond and commercial paper and cut the ratings of Stanley Works (SWK.N), due to Stanley's proposed acquisition of Black & Decker.

Tool maker Stanley Works (SWK.N) said it will buy rival Black & Decker Corp in a $3.46 billion stock deal that is expected to result in $350 million in annual cost savings. For more details, click on [ID:nBNG511551]

Moody's placed Black & Decker's Baa3 senior unsecured and Prime-3 commercial paper ratings under review for possible upgrade. Stanley Works has an A3 rating, the seventh highest.

"If completed, the combined company will benefit from increased scale and product diversity, and will benefit from a stronger balance sheet than Black & Decker on a stand-alone basis," Moody's said in a statement.

Standard & Poor's late on Monday also took similar steps, puting Black & Decker's ratings on watch positive and Stanley Works' ratings on watch negative, suggesting it may take similar action as Moody's.

Moody's also placed Stanley Works' A3 senior unsecured and the Baa1 junior subordinated debt under review for possible downgrade, saying the proposed transaction "will likely result in increased financial leverage and weakened interest and fixed charge coverage, as Black and Decker's debt, lease obligations, and pensions are assumed by Stanley along with its operating assets and cash flows."

Moody's affirmed Stanley Works' Prime-2 commercial paper rating, the second highest. (Reporting by Walden Siew; Editing by Leslie Adler)