Many believe it could be enough action to save Europe from a looming financial crisis that threatens to drag major economies back into recession.
The benchmark S&P/ASX200 index was up 89 points or 2.2% to 420.8.8 at 12.00 AEST, while the Australian dollar fell after disappointing retail and building approvals data, down to $US1.02c.
AMP shares rose 2.53% to $4.25, while Commonwealth Bank shares rose 2.2% to $23.89. ANZ rose 2.11% to $20.32 as Westpac rose 2.38% to $21.06.
In the United States, the Dow Jones Industrial average rose a massive 490 points or 4.2% to 12,045.7.
Central banks pledge to boost liquidity
Some of the major central banks have moved to help commercial banks, announcing "liquidity support to the global financial system".
The move by the central banks of the United States, Japan, Switzerland, Canada and Britain come as the European Union admits it has merely days in order to establish order before a financial crisis could take hold.
The banks warned that many commercial banks are being hurt by downgraded government debt bonds, and are finding it difficult to borrow.
The central banks have said they will make funds available at lower interest rates until February 2013 in order to "mitigate the effects of such strains on the supply of credit to households and businesses".
Meanwhile, the European Union crisis commissioner Olli Rehn has set a deadline of a summit next week in order to provide a response to the debt crisis, saying the EU faces "a critical period of 10 days to complete and conclude the crisis response".
Many other European leaders have echoed that sentiment, saying a solution must be found quickly.
Building approvals slump again, annual fall 30%
Building approvals have defied expectations for a rise, sliding for the second consecutive month and taking the annual decline to 30%.
According to the Australian Bureau of Statistics, the number of dwellings approved slumped by a seasonally adjusted 10.7% in October, following a 14.2% dive in September.
This takes the yearly drop to December to 30%, the ABS said.
Analysts had expected a rise.
Retail sales rise again across the country
Retail sales edged up across the nation in October, lifting a seasonally adjusted 0.2% but missing expectations for a 0.5% rise.
According to the Australian Bureau of Statistics, food retailers, household goods retailers, cafes and restaurants, and other retailers all lifted throughout the month.
But clothing, footwear and personal accessory retailing fell by 0.7%, and department stores were down 0.5% in trend terms.
All states and territories recorded a rise.
The result caps a 0.4% rise in September and 0.6% in August.
Manufacturing activity falls in November
The manufacturing industry continued to contract in November, according to the latest figures from the Australian Industry Group-PWC Australian Performance of Manufacturing Index.
The index fell 0.4 points to 47.8, below the 50-point level separating expansion from contract.
"Manufacturing conditions clearly remain tough and have been so for much of the past year, raising critical issues for policy-makers and businesses alike," AIG chief Heather Ridout said in a statement.
"While the Australian PMI shows an easing in the pace of decline in current activity and new orders, employment levels fell sharply in November, suggesting an ongoing loss of manufacturing capability.
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