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.

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, gaining 2.4 percent.

Chinese shares outperformed, with the Hang Seng Index surging 5.8 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, slipping from an earlier high of $1.0280, after jumping 3 percent to $1.0335 on Wednesday.

The euro stood at $1.3470 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 to last stand at 78.270.

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.

CRUCIAL QUESTIONS UNANSWERED

The central banks' move could warm investor sentiment toward riskier assets as it aims to ease severe funding strains for European banks as money markets seized up on European debt woes.

But European officials have so far failed to nail down who will finance a bailout scheme, which is vital to keeping the crisis from engulfing the continent's biggest economies.

China's monetary easing reflected the spreading global impact of Europe's two-year-old debt crisis, which was confirmed on Thursday by data showing Chinese factory activity shrank in November for the first time in nearly three years.

The PMI fell to 49 from 50.4 in October, and China's export orders fell sharply.

China joined the central banks of Brazil and Thailand which also cut interest rates on Wednesday to fend off growing fears that the global economy may slip back into a recession.

Gold tracked other asset classes higher to hit a two-week high around $1,750 an ounce, after rising nearly 2 percent on Wednesday when 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 the region's 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 December 9 European Union summit 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 on Wednesday.

Asian credit markets strengthened, with spreads on the iTraxx Asia ex-Japan investment grade index tightening by about 20 basis points on Thursday.

(Additional reporting by Hideyuki Sano in Tokyo; and Miranda Maxwell in Melbourne; Editing by Paul Tait)