TOKYO, JAPAN - The Bank of Japan on Thursday announced a dollar swap of up to 60 billion dollars with the US Federal Reserve as part of a coordinated action by the world's central banks faced with market turmoil.

The Japanese central bank said in a statement that it held an emergency meeting to supply US dollar funds to market participants in Japan in conjunction with the Fed.

It said that the European Central Bank, the Bank of Canada, Bank of England and Swiss National Bank were taking part in coordinated measures.

"These measures, together with action taken in the last few days by individual central banks, are designed to improve the liquidity conditions in global financial markets," a Bank of Japan statement said.

The Bank of Japan has injected eight trillion yen (76.2 billion dollars) over the past three days into money markets, hoping to ensure the credit flow does not dry up after the collapse of Wall Street investment giant Lehman Brothers.

The dollar received a lift immediately after the announcement, rising to 105.08 yen in late Tokyo trade from 104.46 shortly beforehand.

The euro slid to 1.4305 dollars from 1.4368.

The Bank of Japan said it was undertaking the swap with the Federal Reserve Bank of New York through the end of January next year.

At the emergency meeting, the Bank of Japan also decided to keep its benchmark interest rate at 0.50 percent, the lowest among the world's major economies.

The central bank had also decided unanimously not to move on interest rates at a two-day policy meeting that ended Wednesday.

Bank of Japan governor Masaaki Shirakawa called a previously unscheduled news conference for 5:00 pm (0800 GMT).