The U.S. Federal Reserve reopened currency swap facilities with other major central banks on Sunday to help ease market strains in Europe.

The Fed revived facilities established during the 2007-2008 financial crisis with the European Central Bank, the banks of Canada and England, the Swiss National Bank. The Bank of Japan said it would also re-establish a dollar swap agreement with the Fed.

These facilities are designed to help improve liquidity conditions in U.S. dollar funding markets and to prevent the spread of strains to other markets and financial centers, the Fed said in a statement.

The Fed will provide dollar swaps for the ECB, the Bank of England and the Swiss National Bank with no upper limit against fixed collateral, as was the case with facilities that had expired February 1.

The Fed said the swap facility with Canada would support drawings of up to $30 billion.

The renewed swap arrangements will run until January 2011, the Fed said.

Japan's central bank said in a statement it had set no limit on the amount of funds that can be drawn in the dollar swap with the Fed and the duration of loans in the swap facility wouldn't exceed three months.

As a credit crunch brought about by the collapse of U.S. housing markets and a tidal wave of mortgage defaults escalated in late 2007, the Fed announced swap lines with the ECB and the SNB to help ease U.S. dollar funding pressures in Europe as the credit crisis deepened.

The announcement was part of a coordinated effort among several major central banks to calm roiled markets.

Over subsequent months, the Fed vastly expanded the initially dose of $20 billion for the ECB and $5 billion for the SNB.

The U.S. central bank eventually said it would provide the ECB and the central banks of England, Japan and Switzerland any amount they wish against fixed collateral.

By the time the program was shuttered, U.S. authorities had opened swap lines with Canada, Norway, Australia, Sweden, New Zealand, Brazil, Mexico, South Korea, and Singapore.

However, with renewed upheaval over worries about contagion from the Greek debt crisis, financial market participants urged the Fed to reestablish the swap lines to ensure access to dollar funding.

In a development reminiscent of the early stages of the previous crisis, the cost of interbank three-month U.S. dollar funds posted the sharpest rise in 16 months on Friday.

(Reporting by Mark Felsenthal; Additional reporting by Tokyo bureau)