* Wall Street gains for 4th day on ECB move to aid banks
* Rally in European equities, short covering support Brent
* Investors sell safe-haven U.S. debt for riskier assets
* Euro jumps on ECB dollar funding, support for Greece (Updates prices, adds Lehman reference)
By Herbert Lash
NEW YORK, Sept 15 (Reuters) - Global stocks advanced for a third straight day and the euro gained sharply on Thursday after the world's leading central banks moved to ease funding for European banks facing difficulties raising U.S. dollars.
In another step to alleviate Europe's debt crisis, U.S. Treasury Secretary Timothy Geithner will discuss with European finance ministers the possibility of leveraging the euro zone's bailout fund to make it more effective, sources said. For details see [ID:nL5E7KF1CX].
The announcement by the European Central Bank, the U.S. Federal Reserve and other central banks to provide short-term funding suggests a concerted effort by authorities to contain Europe's debt crisis after weeks of market turmoil.
The funding move came three years to the day after Lehman Brothers filed for bankruptcy, marking the depths of a financial crisis that is still ravaging global markets.
"This is good for the European banking system, so we're seeing a push higher in equity prices," said Rick Klingman, a Treasury trader at BNP Paribas in New York.
"The ECB-Fed joint announcement is causing a risk-on type trade because they're providing dollar funding through year-end."
European shares rose more than 2 percent and the euro jumped over 1 percent after the ECB unveiled three-month dollar loans in a move to prevent money markets from freezing up. [ID:nL5E7KF2LG]
The announcement sharply boosted bank shares in the euro zone <.SX7P> and cut aversion to risk. The price of safe-haven government debt and gold fell.
The euro
The FTSEurofirst 300 <.FTEU3> index of top European shares closed up 2.1 percent, and has now gained 6.2 percent since touching a two-year low on Tuesday.
The ECB move, which came a day after the notion of common euro zone bonds was again floated and European leaders pledged support for Greece while insisting on austerity measures, was still unlikely to relieve market stresses, analysts said.
Analysts said a funding crunch in Europe has been going on for months, with dollar-rich U.S. banks reportedly requiring 130 percent collateral for a loan to European banks.
"The swap agreements alleviate funding concerns in the short term, but it doesn't tackle the underlying problems, nor is it a solution to the European crisis," said Lauren Rosborough, currency strategist at WestPac in London.
On Wall Street, the Dow Jones industrial average <.DJI> was up 174.87 points, or 1.55 percent, at 11,421.60. The Standard & Poor's 500 Index <.SPX> was up 18.73 points, or 1.58 percent, at 1,207.41. The Nasdaq Composite Index <.IXIC> was up 33.43 points, or 1.30 percent, at 2,605.98.
The Nasdaq briefly turned negative before midday after
Netflix Inc
In a sign of difficulties ahead, German Chancellor Angela Merkel bluntly rejected euro zone bonds as a solution to Europe's sovereign debt crisis. [ID:nL5E7KF1CX]
There was also no clear sign from a conference call of German, French and Greek leaders on Wednesday that a stalemate over Athens' next bailout payment had been broken. [ID:nLDE78D090]
Bund futures fell and Greek credit default swap prices
Investors pushed aside a fresh spate of disappointing data that showed new claims for U.S. jobless aid unexpectedly rose last week and factory activity along the mid-Atlantic contracted early this month. The data backed the view the Fed would move soon to boost economic growth. [ID:nS1E78E0U8]
The price of the 30-year U.S. Treasury bond fell more than a point as the prospect of a long stretch of loose monetary policy coupled with higher inflation prompted investors to dump long bonds.
The 30-year bond
Crude oil rose more than $3 a barrel at one point, buoyed by the rally in European equities, a weaker dollar and improved risk appetite. [ID:nL3E7KF0IJ]
Brent crude
Spot gold prices