THE Bank of Japan said it will offer lenders an unlimited amount of dollars, joining European counterparts in attempting to lower borrowing costs in money markets and free up credit worldwide.

The central bank will "introduce US dollar funds- supplying operations whereby funds are provided at a fixed rate set for each operation for unlimited amount against pooled collateral," it said in a statement in Tokyo yesterday.

Japan's decision came a day after the Federal Reserve said the European Central Bank, Bank of England and Swiss National Bank will offer European banks as many dollars as they want at fixed interest rates against "appropriate collateral."

Flooding the global financial system with the world's reserve currency helped stock markets rebound after last week's 20 percent slide in the MSCI World Index.

Japan's Nikkei 225 Stock Average surged 14.2 percent yesterday, its biggest-ever gain.

The policy board held the key overnight lending rate at 0.5 percent in a unanimous decision at yesterday's meeting. The Bank of Japan didn't participate in last week's rate cut by central banks in North America and Europe.