LONDON -- Five central banks acted Thursday to shore up confidence in Europe's financial system by giving its banks far greater access to U.S. dollars.
The move buys time for banks that hold large amounts of debt issued by Greece and other financially troubled European countries. Some of these banks have had trouble paying for daily operations because other banks have refused to lend to them any more.
Under Thursday's action, the banks can borrow unlimited dollars for three months, up from the current one-week limit.
The European Central Bank said it will coordinate with the U.S. Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank to offer the loans through the end of this year. Their move to supply more dollars is similar to steps taken during the 2008 financial crisis and again in May 2010.
The news reassured stock markets, which have been battered by rumors that banks' losses on their loans to Greece might sink them. Stock indexes in France and Germany each surged 3.1 percent. The euro rose against other currencies. U.S. indexes rose by more than 1 percent.
Concern about their access to dollars has been a key reason why European banking stocks have been beaten down. Investors have been particularly worried about big French banks Societe Generale and BNP Paribas. Thursday's news sent Societe Generale's stock soaring 8 percent and BNP Paribas' 13 percent.
