A substantial take-up of the European Central Bank's latest offer of cheap loans lifted stock markets and commodities on Wednesday, driving demand for higher yielding currencies at the expense of the euro.

Around 800 banks took 530 billion euros ($711.45 billion) at the ECB's second-ever offering of 3-year funding, essentially in line with market expectations.

The boost to liquidity, which amounts to over one trillion euros when combined with an early offering in late December, is expected to support demand for riskier assets like equities, commodities and peripheral European bonds.

This will increase the level of excess liquidity pretty sharply, which is ultimately positive or very positive for risk trades, said Luca Cazzulani, Unicredit fixed income strategist.

The FTSEurofirst 300 index of top European shares extended its gains after the auction result to be up 0.7 percent at 1,083.97 points, while safe-haven German government bond futures dipped to be down 57 ticks at 139.49.

The MSCI's world equity index was up about 0.35 percent after Asian stocks rose to a seven-month high earlier in the day.

The ECB's two long-term liquidity injections do not solve the underlying solvency problems in the euro area but they could push the crisis back into remission for a while if they give economic growth a boost, Trevor Greetham, Director of Asset Allocation at Fidelity Worldwide Investment said.

We moved overweight equities and commodities in our multi asset funds in February for the first time since July 2011,

But the euro, which is also seen as riskier asset, fell to a session low of $1.3435 after the tender result became known, still below a near three-month peak of $1.3487 set on Friday.

Traders said as the result was in line with expectations and had been more or less priced in, the euro's scope for gains was limited and the excess liquidity was likely to boost carry trades in which investors use lower-yielding currencies to buy riskier assets, which would weigh on the euro.

The Australian and New Zealand dollars rose against the U.S. dollar, and also made gains against the euro.

Gold in dollars was up 0.3 percent on the day at $1,790.16 an ounce, below the session high at $1,790.30 hit earlier in the day.

Oil prices were also recovering after sharp losses on Tuesday with Brent crude trading at $122.60 a barrel. Oil has risen sharply this year, raising concerns over global economic growth going forward.

With the ECB tender out of the way, market attention will turn to U.S. Federal Reserve Chairman Ben Bernanke's semi-annual testimony on monetary policy before the House Financial Services Committee due at 1500 GMT.

($1 = 0.7450 euros)

(Additional reporting by Joanne Frearson; editing by Anna Willard)