Asian shares extended gains on Thursday after the world's six major central banks moved to tame a liquidity crunch for European banks by providing cheaper dollar funding.

MSCI's broadest index of Asia Pacific shares outside Japan jumped 1.3 percent, after U.S. stocks rallied 4 percent and European equities rose 2 percent on Wednesday. Japan's Nikkei opened up 1.7 percent on Thursday.

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.

A move by China on Wednesday to cut the percentage of cash banks must keep as reserves also boosted sentiment.

The central banks' move aims to thaw severe funding strains for European banks as lenders had been extremely reluctant due to concerns over the euro zone's ability to quickly resolve its debt crisis, and could warm investor stance towards risk.

We see this move as bullish risk as it is more of a precautionary USD liquidity injection to be used in the uncertain months ahead, as opposed to a response to an already-existing USD shortage, Nomura analysts Stanley Sun and Charles St-Arnaud wrote in a note.

The euro stood at $1.3444 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, before recovering a bit of ground to last stand at 78.378.

The adverse effect from Europe's two-year-old debt woes has spread globally, prompting China to cut the reserve requirement ratio for its commercial lenders on Wednesday for the first time since December 2008, marking a monetary policy shift to an easing bias.

The easing by China, a huge commodity importer, lifted commodity currencies. The Australian dollar stood at $1.0262 after jumping 3 percent to a high of $1.0335 on Wednesday.

China joined the central banks of Brazil and Thailand which also cut interest rates on Wednesday to fend off heightening risks the euro zone crisis could push the global economy back into a recession.

Purchasing manager data due later on Thursday could confirm China's manufacturers were hurt by the global slowdown.

Gold steadied after rising nearly 2 percent on Wednesday for its biggest three-day rally in more than a month, as investors sought a hedge against currency depreciation after the central bank action.

The liquidity action by central banks followed a day after European officials agreed to strengthen a rescue fund and seek more aid from the International Monetary Fund.

Germany suggested it was open to increasing the IMF's resources through bilateral loans or more special drawing rights, reversing the stance Berlin took earlier this month at the Cannes G20 summit.

The policy shift came as Germany presses its EU partners to agree at a crucial European Union summit on December 9, on treaty changes to create coercive powers to make euro zone countries change their budgets if they breach EU deficit and debt rules.

Reflecting easing financing conditions, euro/dollar cross-currency basis swaps narrowed across the three-month to one-year maturity curve.

Asian credit markets strengthened, with spreads on the iTraxx Asia ex-Japan investment grade index tightening sharply in early Asia on Thursday.

(Additional reporting by Ian Chua in Sydney; Editing by Ed Lane)