Central banks in the US and Europe launched a fresh co-ordinated assault to ease strains in financial markets on Friday, as a fall in unemployment raised questions as to whether the US really is in recession.

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The Federal Reserve said it was increasing the size of ts credit auction facility – which offers one-month loans to banks – by half to $150bn.iThe Fed, the European Central Bank and Swiss National Bank announced a near-50 per cent increase in currency swaps – exchanging euros and Swiss Francs for dollars – allowing European authorities to provide more dollars to their banks.

Both moves are designed to target the stress in the interbank money markets, which remains intense despite progress in other credit markets. Libor, the main interbank borrowing rate, forms the benchmark for many loans to companies and individuals.

The US central bank also widened the pool of assets that can be swapped for Treasuries through its securities lending programme. It will now accept top-rated securities backed for instance by student loans, credit card debt and car loans.

New figures showed that the US economy lost only 20,000 jobs in April – fewer than in the previous three months and far fewer than the 80,000 expected – while unemployment declined from 5.1 per cent to 5 per cent. Carlos Gutierrez, commerce secretary, told the FT: “This is another sign of the resilience of the economy.”

The jobs news sent Wall Street stocks to their highest levels of the year but they lost steam in the afternoon, with the S&P 500 index closing 0.3 per cent higher. Earlier, the UK’s FTSE 100 index rose 2.1 per cent to its highest level since mid-January.

Analysts said the central bank initiatives were likely to help conditions, but warned that credit markets remained jittery.

The moves were initiated by the Fed, which believes that many of the strains in the dollar money markets reflect pressure from European banks that are structurally short of dollars. This view is questioned by European central bankers, but they agreed to take part. The Bank of England did not participate.

Additional reporting by Chris Giles in London and Aline Van Duyn in New York