Central banks including US Federal Reserve and Bank of Japan act to inject liquidity into international markets

Central banks including the Bank of England are to inject £100bn of funds in the money markets in a concerted bid to prop up the international banking system.

The Bank of England has agreed to pump in £22.3bn, while parallel action is being taken by the US Federal Reserve, the European Central Bank and the Bank of Japan, along with the Swiss National Bank and the Bank of Canada.

Stocks rallied after the news, as banks rushed to take up the first wave of cash, which was offered at auction this morning in the form of US dollar funds against eligible collateral.

The Bank of England has said that the move is designed to improve the liquidity conditions in global financial markets.

Recent days have seen global turmoil in the markets with a series of crises among major financial institutions such as Lehman Brothers, AIG and HBOS.