The move by the US Federal Reserve and the world's five other main central banks to flood the markets with cheap access to US dollars sent stock markets surging.

The Irish exchange rose 3.9 per cent, outstripping the 3.2 per cent gain in the FTSE in the United Kingdom.

Banks were among the biggest movers across global markets.

Bank of Ireland, the only Irish bank still trading on the main Dublin exchange, rose 6.9 per cent, or just under 1 cent, to 9.3 cent, while AIB rose 8.3 per cent or half a cent to 6.5 cent on the junior exchange, the ESM.

"It wasn't quite the big bazooka that the market was expecting, but it pushed stocks higher," said one Dublin trader, who noted it might help liquidity for banks but would not solve the sovereign debt crisis in the euro zone.

An unsubstantiated market rumour circulated around trading rooms that the co-ordinated liquidity measure was introduced to save a major European bank. The rumour mill was in full spin by mid-afternoon, some three hours after the announcement by the central banks.

Despite concerns that this just may prove a temporary reprieve, Irish stocks enjoyed a welcome lift during the day. A reweighting in stock indices also helped drive Irish equity prices higher.

The heaviest trading was in Bank of Ireland, Ryanair and CRH.

Aer Lingus rose 9 per cent or 6 cent to 72 cent and Ryanair gained 4.7 per cent or 17 cent to €3.80.

Building materials giant CRH rose 6 per cent or 82 cent to close at €14.25. Stocks in the same sector enjoyed a similar fillip. Kingspan rose 5.3 per cent or 34 cent to €6.64, while Grafton gained 4.5 per cent or 11 cent to €2.55.

UK stocks surged the most in eight weeks after the central bank move eased funding for European lenders and China cut its reserve ratio for banks.

The benchmark FTSE 100 Index gained 3.2 per cent to 5,505.42 at the close in London.

The gauge earlier fell as much as 1.2 per cent after Standard and Poor's cut the credit ratings of some of the world's largest banks.

France's CAC 40 Index rose 4.2 per cent and Germany's DAX Index surged 5 per cent. The Dow Jones industrial average jumped 422.58 points, or 3.66 per cent, to 11,978.21. The Standard and Poor's 500 Index rose 43 points, or 3.57 per cent, to 1,237.84.

Financial and other economically sensitive stocks jumped after the action.

Lloyds Banking Group and Royal Bank of Scotland surged more than 7 per cent in London trading. Deutsche Bank, Germany's biggest bank, soared 6.2 per cent to 28.62 pence.

Bank of America Corp rose 3.2 per cent to $5.23 after hitting a near trhee -year low, while JP Morgan Chase and Co added 6.4 per cent to $30.39.

Mining companies rallied with metal prices as the People's Bank of China reduced its reserve ratio for the first time since 2008.

BHP Billiton, the world's biggest mining company, paced gains in commodity shares. BP, Europe's second-largest oil company, rose the most in two months.

The intervention by the world's top central banks - including the European Central Bank, Bank of Japan and Swiss National Bank - involved lowering the cost of emergency US dollar funding for banks and expanding currency swap lines between countries.

Although partly aimed at easing seasonal year-end financing conditions in an already stressful environment, the move was an important show of unity among the central banks.

It showed the international official concern about the threat of the ongoing euro and banking crisis to global economic activity at large and comes the same day as China's central bank eased credit for its commercial lenders.

The European Central Bank is also widely expected to cut interest rates again next week.