The Bank of England on Friday offered to lend banks £40 billion in medium-term funds, a move which analysts said could ease strains in credit markets and may even stop the rot in mortgage lending.

The BoE also said it was switching $30 billion of the $40 billion it has been offering overnight to one-week funds "to address funding pressures over quarter end".

"Central banks continue to work together closely and are prepared to take further steps as needed to address the ongoing pressures in funding markets," the central bank said in a statement.

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