TOKYO: Asian shares rallied to two-week highs on Thursday, building on strong global gains after the world's six major central banks moved to tame a liquidity crunch for European banks by providing cheaper dollar funding.

Financial spreadbetters expect the leading European benchmark indexes to rise on Thursday, extending a sharp four-session rally on increased risk appetite following the central bank joint action.

The U.S. Federal Reserve, the European Central Bank and the central banks of Canada, Britain, Japan and Switzerland said on Wednesday they would lower the cost of existing dollar swap lines by 50 basis points from December 5, and arrange bilateral swaps to provide liquidity for other currencies.

MSCI's broadest index of Asia Pacific shares outside Japan jumped 4.4 percent to its highest since mid-November, rising above a 25-day moving average, after U.S. stocks soared 4 percent on Wednesday.

Japan's Nikkei also surged well above its 25-day moving average, closing up 1.9 percent.

Chinese shares outperformed, with the Hang Seng Index surging close to 6 percent after Beijing cut the reserve requirement ratio for commercial lenders on Wednesday for the first time in three years, signaling a policy shift as global weakness weighs on China's economy.

"It's clearly a risk-on day given everything that happened overnight," said Su-Lin Ong, senior economist at RBC Capital Markets.

Industrial metals such as copper, zinc and aluminum jumped as funding strains eased, while the policy step by China, a huge commodity importer, lifted commodity currencies. The Australian dollar stood at $1.0255, off an earlier high of $1.0280, having jumped 3 percent on Wednesday.

The euro changed hands at $1.3455 after jumping to a one-week high of $1.3531 on Wednesday while the dollar index slumped to a two-week trough at 77.923. The index stood at 78.35 on Thursday.

"The moves were cheered by markets, as it shows central banks are willing to work together to ease Europe's sovereign debt crisis," said Stan Shamu, strategist at IG Markets.

But some analysts were more cautious, saying the central banks' moves just bought more time for Europe as it battles to contain its worsening debt crisis.

"This just means they expanded emergency measures. The more important point is whether Europe is going to have a bigger bailout fund and that's still up in the air," said Soichiro Monji, chief strategist at Daiwa SB Investments, in Tokyo.

Source: The Daily Sun/ Bangladesh/ 2nd Dec 2011