Has the £140 billion (almost $A220 billion) stimulus package, announced this morning in London by the UK government and the Bank of England, confirmed market rumours that central banks around the world are on standby to take action to stabilise nervy financial markets this weekend as Greece goes to the polls for a second time in a month?

The media reports and leaks came as leaders prepared to attend the Group of 20 meeting in Mexico next Monday and Tuesday. The Greek poll result should be top of the agenda for the talkfest, but the leaders, many of them from the eurozone, won’t be able to do much to help steady markets. To do so would involve splitting the eurozone even further by pressuring Germany to underwrite the euro and support the other 16 countries when that is the very thing being resisted, either via government action, or through the European Central Bank. Hence the move by the UK ahead of that meeting.

That move in London came after a very worried opening to trading in Europe in which Spanish 10-year bond yields rose above 7% for the first time in the euro era, a level widely seen as being unsustainable. That was after the downgrade by Moody’s late Wednesday night. Yields fell back under 7% after the reports on Reuters and from Greece of good poll figures. Yields on Italian sovereign bonds also eased.

Markets in the US steadied and then rose after rumours of the central banks’ moves appeared on Reuters during trading. It saw markets in Spain, Italy and Greece end higher (Athens jumped 10%).  But markets in the UK, Germany and France closed lower. Also helping were leaked reports in Athens of unofficial opinion polls (they are banned leading up to the poll) that suggested the New Democracy Party was leading the left-wing Syriza group, which wants to repudiate the bailouts, but remain in the euro.

The news saw the Aussie dollar regain parity with the greenback for a third time this week. It moved to $US1.020 at 9am in Asian trading in the belief that the central bank story was true. In Australia there are no signs of bank concerns. The exchange settlement accounts at the RBA remain at low levels, indicating local banks are happy lending to each other on an overnight or longer basis. Those balances skyrocketed to more than $10 billion during the GFC in late 2008 and early 2009. Forex traders pointed to British announcements as supporting the reports on Reuters, which in turn helped currencies such as the Aussie dollar this morning.

And then the UK government and Bank of England started leaking ahead of release, that a huge round of new stimulatory spending was planned. And then it happened. The Telegraph said that £140 billion  would be injected “to try and avoid a second credit crunch caused by the ongoing chaos in the eurozone”. The announcement came in the annual speeches by George Osborne, the Chancellor of the Exchequer, and the head of the Bank of England, Sir Mervyn King, at the Mansion House in London overnight.

The Financial Times led its UK edition and website with the news but it didn’t appear on the front page of the Asian website. But the lede para summed up the intent: “George Osborne on Thursday night announced plans for a £100 billion support program for the British economy, as he battened down the hatches for a worsening eurozone debt storm.”

Of course, for UK Prime Minister David Cameron, the announcements will overshadow the five hours of questioning he had to endure at the Leveson media inquiry earlier on Thursday. Good politics and a timely announcement by the government and the Bank of England, but the impact was much broader than just the UK media on Thursday night and this morning.