Central bankers stepped up efforts to pump funds into the global financial system today as Mervyn King, the Governor of the Bank of England, met heads of the UK's five biggest banks following days of stock market turmoil and rumours of market manipulation by short-sellers.

The European Central Bank offered €15 billion for auction and 44 banks applyed for €65.8 billion. At the same time, the US Federal Reserve said it will offer $25 billion to banks.

The Bank of England had already doubled its weekly emergency funding to £10.93 billion at a rate of 5.25 per cent and will offer this each week until April 9.

It move came as the chief executives of HBOS, Royal Bank of Scotland, Barclays, Lloyds TSB and HSBC were due to meet Mr King for an "exchange of views".

Angela Knight, chief executive of the British Bankers' Association, told BBC Radio 4’s Today programme earlier that the banks are likely to ask the Bank of England to work with other major global central banks to help shore up liquidity in the markets.

She said: "I expect they will want to ensure that the same type of collateral (for central bank loans) is taken here as it is by the Fed and European Central Bank.”

Ms Knight said it was vital the Bank helped maintain confidence in the financial system.

She added: "I think the issue here is much more about ensuring that as peaks and troughs hit, central banks are prepared to act and provide liquidity if liquidity is required.

“The Bank of England is very keen to ensure that we have good strong confidence in our market. After all, we’ve got good strong banks.”

The meeting comes the day after the Bank of England was forced to publicly deny rumours that HBOS was seeking emergency funding, and the Financial Services Authority announced it was launching an inquiry into suspicions that some traders had spread false rumours in the hope of making profits on market gyrations.

Andy Hornby, chief executive of HBOS, is expected to want to discuss how rumours that his bank was about to request an emergency loan flew around the stock market yesterday.

The Bank of England said the meeting with bank executives was scheduled a week ago and was not in response to any specific event. However, it is virtually certain that the news of the past few days will be top of the agenda.

It is likely that Britian's high street bankers will want assurances from the Bank of England that it will take decisive action to stop the economy falling into recession, as the US Federal Reserve has done in recent weeks with aggressive rate cuts. The Bank of England has so far been slow to cut rates.

Britain's high-street banks have already announced billions of pounds worth of writedowns owing to their exposure to the US housing market.

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