European shares stabilised on Thursday, after surging the previous day as major central banks pumped dollar liquidity into the global financial system to prevent another crippling credit crunch. London\'s FTSE 100 index rose 0.30 percent to 5,521.89 points, Frankfurt\'s DAX 30 slid 0.77 percent to 6,036.95 points and the Paris CAC 40 slipped 0.51 percent to 3,138.69. Milan won 0.12 percent and Madrid fell 0.32 percent. The European single currency meanwhile increased to $1.3501, compared with $1.3438 late in New York on Wednesday. Global markets and the euro had rocketed on Wednesday as six major central banks, led by the US Federal Reserve, pumped liquidity into the financial system to prevent a second credit crunch linked to the eurozone debt crisis. In a surprise move, the central banks of the United States, the eurozone, Britain, Japan, Canada and Switzerland said they would cut the cost of providing dollars to banks. \"The action by the central bank is a direct counter-attack to the tensions in the interbank market which have continued to worsen as a consequence of the eurozone crisis and stresses in the banking sector,\" said Rabobank analyst Jane Foley. \"The strong boost to risk appetite has been maintained overnight with Asian stock markets higher across the board (and) euro/dollar holding most of its gains.\" In response to the coordinated action, London had leapt 3.16 percent, Frankfurt surged by 4.98 percent and Paris soared 4.22 percent in value on Wednesday, while Madrid and Milan won 3.96 and 4.38 percent respectively. In addition, the euro had spiked to $1.3533 -- which was the highest level since November 22. Wall Street shot four percent higher overnight after the central banks joined hands to ensure commercial banks would not be undermined by market worries over the eurozone crisis. The arrangement allows the central banks to lend dollars to commercial banks that might be finding it hard to borrow directly from other banks. They said they would reduce the interest rate on this operation by half a percentage point from December 5 until February 1, 2013. Asian markets also jumped on Thursday after the move to boost liquidity for the gummed-up financial system, and as China also cut the amount of cash lenders must hold in reserve. Hong Kong rallied 5.63 percent, Shanghai won 2.29 percent and Tokyo jumped 1.93 percent higher. Seoul added 3.72 percent and Sydney increased by 2.64 percent. \"Strong trading in Asia on Thursday extended gains made around the world on Wednesday after many global central banks made pledges to improve liquidity,\" said Owen Ireland, broker at Valbury Capital. \"Not only has this lifted spirits worldwide, the move confirms that policy makers are willing to do what is necessary to encourage stability in the markets. \"Furthermore, a coordinated global effort is precisely what is needed if we are to achieve any long term recovery goals. Investors will be keen to see if this renewed optimism can be maintained throughout today\'s trading in Europe and America.\" However, other analysts argued that the move would not solve the root cause of liquidity problems. Eyes will now be on a European summit next week, where pressure will be on leaders to come up with a plan to tackle the region\'s two-year-old sovereign debt crisis. \"This move is obviously aimed at alleviating the dollar funding strains that the European Banking system is currently experiencing,\" said equities analyst Juliet Tennent at Goodbody Stockbrokers in Dublin. \"The ECB, backed by the other major central banks, was already providing dollar funding, limited only by the amount of eligible collateral available, to the European banks and this move will make the rate paid less punitive. \"While this may provide short term relief to the European banking system, particularly with year end looming, it does not address the fundamental issues that the euro-area is facing. \"We will have to wait for the outcome of the summit of EU leaders on the 9 December to see what further action is to be taken in that regard.\" European banks have for months found difficulty raising dollars on the markets after US investment funds pulled out over concerns about the eurozone crisis. Also on Wednesday, Beijing said it would cut the reserve requirement ratio (RRR) by 50 basis points in a bid to boost liquidity, the first such move by China since the global downturn amid expectations of a bout of monetary easing. But sentiment was dented on Thursday as official data showed that Chinese manufacturing activity shrank in November for the first time since February 2009.