European shares rocketed Wednesday and the euro leapt above $1.35 as leading central banks pumped liquidity into the financial system to prevent a second credit crunch linked to the eurozone debt crisis. The European Central Bank, the US Federal Reserve and central banks in Japan, Britain, Canada and Switzerland unveiled coordinated lending action to reduce strains on financial markets. In response, stock markets surged. London\'s FTSE-100 index of leading shares finished the day up 3.16 percent at 5,505.42 points, while in Paris the CAC-40 jumped 4.22 percent to 3,154.62 points. In Frankfurt the DAX 30 ended up 4.98 percent at 6,088.84 points after having been over five percent. Madrid climbed 3.96 percent and Milan gained 4.38 percent. The European single currency hit a one-week peak of $1.3533, from a level of around $1.33 moments before the news. At 1700 GMT the euro was trading at $1.3462, still up from $1.3317 late on Tuesday. Across the Atlantic, Wall Street also shot higher after the six central banks announced coordinated measures that are aimed at ensuring the financial system could weather the severe stress in the eurozone. Approaching midday the Dow Jones Industrial Average was up 3.74 percent to 11,987.82 points while the broader S&P 500 had climbed 3.49 percent to 1,236.88 points and the tech-heavy Nasdaq added 3.57 percent to 2,605.38 points. \"Another coordinated central bank intervention, and one that caught markets completely off-guard,\" said analyst David Morrison at GFT trading group. \"The move brings relief as it removes immediate liquidity fears,\" he told AFP. European stocks had begun Wednesday by trading in negative territory as eurozone finance chiefs struggled to boost the firepower of a bailout fund for indebted members at a key gathering in Brussels on Tuesday. But following the central banks\' action, Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: \"The world\'s central banks have shown the European area the meaning of decisive and coordinated action.\" The central banks said in a joint statement on Wednesday that they were acting in a coordinated way to reduce strains on the financial markets and boost lending to businesses and consumers. They added that they were lowering the cost of providing dollars to banks, and were engaging in \"coordinated actions to enhance their capacity to provide liquidity support to the global financial system\". \"The purpose of these actions is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity,\" they said. The arrangement allows the central banks to lend dollars to commercial banks that might be finding it hard to borrow them directly from other banks and is aimed at easing tensions in the crucial interbank lending market. The banks added that they were not only reducing the cost of this operation, but also extending it until February 1, 2013. The central bank move also helped lower borrowing rates for eurozone governments, with the yield on 10-year German bonds falling to 2.276 percent from 2.327 percent late on Tuesday. The yield on French 10-year bonds dipped to 3.380 percent from 3.510 percent, while the rate of return on Italian 10-year bonds dropped to 7.001 percent from 7.209 percent. European stock markets began their rebound in late morning deals on Wednesday after China unexpectedly cut its ratio of obligatory bank reserves, offsetting concerns about the eurozone debt crisis. China\'s central bank said on Wednesday it will cut the reserve requirement ratio for the country\'s banks by 0.5 percent, effectively increasing the amount of money banks can lend, in its clearest sign that the government is easing tight credit restrictions put in place to curb surging inflation and property prices. \"China\'s action is very much an indication of how concerned policymakers there are about the consequences of the euro area crisis,\" said Daiwa economist Chris Scicluna. \"Today\'s cut in reserve requirements is likely to be just one first step to ease monetary conditions there, with further significant easing of reserve requirements likely through the first half of 2012. \"While a welcome surprise for the Chinese economy, which has already being showing signs of strain, like today\'s co-ordinated action by the major central banks, it is another indication of how fearful policymakers beyond Europe are of the massive downside risks posed by events in the euro area.\" Investor sentiment remains clouded however after eurozone finance chiefs failed to agree to lift the region\'s bailout fund to one trillion euros, while Standard & Poor\'s cut its ratings on 15 major global banks overnight. While welcoming the central bank moves, Atif Latif of Guardian Stockbrokers said it and rumours that the ECB would relax collateral requirements along with expectations it would further cut its main lending rate did not get to the heart of the problem. \"None of these actions address the core issues of sovereign debt or their restructuring,\" he said. Asian equities mostly slipped on Wednesday, after two days of gains, as the eurozone drama continued to dominate sentiment. Markets were also hit by news that India\'s economic growth slowed to 6.9 percent year-on-year in the last quarter, its lowest in over two years, hit by a string of rate hikes and a weakening global economy.