(CNN) -- Central banks around the world are pumping billions of dollars into money markets in a coordinated bid to calm global financial upheaval.
The package of up to $247 billion comes from the U.S. Federal Reserve, the European Central Bank, the Swiss National Bank, the Bank of England, the Bank of Canada and the Bank of Japan.
The injection of cash, which amounts to an expansion of up to $180 billion in available funds, is an effort to fuel economic activity.
With major financial and insurance institutions teetering, commercial banks have tightened their lending policies and increased interest rates, taking billions of dollars out of the economy.
Under the plan, the European Central Bank will inject up to $110 billion, the Swiss National Bank up to $27 billion, the Bank of Japan up to $60 billion, the Bank of England up to $40 billion and the Bank of Canada up to $10 billion.
"We're very grateful that the rescue package has been put on the table, because frankly the world's inter-bank markets are just simply not working in the manner that they should do," said David Buik of the BGC Partners brokerage firm in London. "There's a wholesale mistrust ... amongst everybody."
"It is essential that the central banks do stand there and massage the trust back into action," Buik said. "Without them, we would be in unbelievably uncontrollable turmoil."
Britain's Lloyds TSB has announced a $22 billion deal to take over struggling HBOS, the UK's biggest mortgage lender. The government said it would facilitate the deal by overriding anti-monopoly regulations.
News of the central banks' plan cheered stock markets in Europe, with Britain's FTSE-100 up nearly 1.9 percent, Germany's DAX up nearly 1.5 percent and France's CAC 40 index up 1.6 percent.
Russia's main stock exchanges suspended trading for a second consecutive day as the government tried to stop plunging in share prices and restore confidence.
Hong Kong's Hang Seng sank more than 7 percent at one point on Thursday, but closed flat as Asia shares staged an afternoon comeback to partially recoup losses.
On Wednesday, the Dow Jones industrials tumbled 449 points -- its second worst day of the year, but only the second worst day this week. The Nasdaq and the S&P also suffered drops of more than 4 percent.
The sell-off came in the wake of investment bank Lehman Brothers' bankruptcy, Merrill Lynch's sale to Bank of America, and the U.S. government announcing an $85 billion plan to bail out insurance giant American International Group (AIG).
American financial investor Jim Rogers told CNN: "It's going to get worse. There are going to be more bankruptcies. There's going to be a big cleanout in the financial system." Watch Jim Rogers describe where he is investing his money »
"It's a complete collapse of confidence," Francis Lun, general manager of Fulbright Securities Ltd in Hong Kong, told The Associated Press. "The financial crisis in the U.S. is hitting everyone, everyone is running for cover. If the largest insurance company can fail, than no one is safe."
The remaining two Wall Street investment banks were hit particularly hard on Wednesday with Morgan Stanley down 29 percent and Goldman Sachs down 21 percent.
British bank Barclays said it had reached a deal Wednesday to purchase key units of U.S. investment bank Lehman Brothers for $1.75 billion.
The deal came just two days after Barclays walked away from talks to buy the beleaguered financial institution in its entirety.
Barclays will acquire Lehman's North American investment banking and capital markets businesses for $250 million in cash.
Barclays will also purchase Lehman's New York headquarters and two data centers in New Jersey at their current market value estimated at $1.5 billion, a company statement said. Watch more about the Barclays deal »
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