With the crisis scaring lenders from the interbank market, the US Federal Reserve, the European Central Bank, and the central banks of Britain, Japan, Canada and Switzerland announced they would make cheaper US dollars available to liquidity-starved commercial banks.

The move was targeted mainly at strained European banks, and drove a new surge of confidence that infected commodity and stock markets as well, sending major European and US bourses up more than four percent.

The announcement, which came at 1300 GMT, ignited an immediate spike in the euro against the dollar, and the currency held its ground through the rest of the day.

At 2200 GMT the euro was at $1.3438, compared to $1.3317 late Tuesday.

The common currency also jumped to 104.25 yen from 103.66 yen, while the greenback sagged to 77.58 yen from 77.87.

Kathy Lien of currency specialists GFT warned that downside risk has not been eliminated for the euro, given that EU finance ministers made little progress themselves in their Brussels meeting Wednesday on a comprehensive eurozone crisis fix.

However, she said, "the risk rally could still last for a few more days because today's action by central banks eases conditions in the financial markets."

"More importantly, (it) shows that central banks are willing to work together to avoid another financial catastrophe."

The dollar also eased against the Swiss franc, to 0.9134 francs from 0.9208, while the British pound pushed higher to $1.5695 from $1.5595.