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The dollar was trading at $2.02 to the pound, from $2.0298 last night.

The ECB's latest injection came amid mounting global credit jitters sparked a scramble for cash by financial institutions.

The ECB said today that 62 parties had made bids for €110 billion of its funds at the morning auction. The minimum interest rate was set at 4.0 per cent, with those parties bidding the highest rate served first. The average interest rate was 4.08 per cent.

The Bank said:"This liquidity, providing a fine tuning operation, follows up on the operation conducted yesterday and aims to assure orderly conditions in the euro money market.”

The ECB actions have outstripped even the scale of its intervention on the day after the September 11, 2001, terrorist strikes on the US, when it pumped in €69 billion of liquidity to stabilise credit markets.

Fears of weakness in the US sub-prime mortgages market were underlined as BNP Paribas, the French bank, yesterday said it was freezing €1.6 billion of funds on concerns over their exposure to the sub-prime mortgage market.

Before the ECB's initial move the interest rate for eurozone banks seeking to borrow money from each other overnight spiked to 4.62 per cent — its highest since the aftermath of the 9/11 attacks and far above the central bank’s 4 per cent target level.

The surge in overnight rates was the latest sign of the strains on financial institutions from the worsening world squeeze on credit. It came as leading banks struggled to secure finance to cover more than $300 billion (£148 billion) of corporate loans stockpiled on their balance sheets, and resorted to tapping the overnight money markets for funds.

"There appears to be a dash for cash both in dollars and in euros," Nick Parsons, head of strategy at nabCapital, said. "Because liquidity in the market is drying up, and because financing is also becoming difficult, it seems that investors who need to finance holdings of securities are not being able to draw on credit facilities and instead are having to finance off the cash market. That’s putting up rates for cash."

Those pressures were also evident in London money markets as overnight dollar lending rates leapt to 5.45 per cent, also a six-year high, having begun rising late on Wednesday in New York trading.

The growing credit crisis is also showing signs of impacting the race to buy ABN Amro, the Dutch bank.

Fortis, the Belgium bank that is part of Royal Bank of Scotland's bidding consortium, has admitted its plans to sell €2 billion (£1.3 billion) worth of bonds to help finance the takeover of the Dutch bank ABN Amro may be delayed.

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