ECB bond purchases down sharply

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The European Central Bank said Monday it sharply cut back its weekly purchases of eurozone bonds that are part of a programme aimed at driving down borrowing costs and fighting the debt crisis.

The ECB said it bought just 635 million euros ($839 million) in bonds last week, down from 3.662 billion euros the previous week.

The ECB, as usual, did not specify which government bonds it had bought.

The bank has now bought a total 207.5 billion euros in eurozone government bonds since it first began the controversial operations early last year as part of efforts to ease debt strains in the 17-nation bloc.

It resumed major purchases in August when renewed strains pushed Italian and Spanish borrowing rates to unsustainable levels but purchases have dropped sharply in the past two weeks.

According to a recent unconfirmed press report, the ECB has secretly set a 20-billion-euro limit on its weekly purchases of sovereign bonds.

Several European governments have put pressure on the ECB to step up its programme of buying bonds, seen by some as a possible solution to the debt crisis.

But the ECB, backed by Germany, has steadfastly refused, arguing that its sole responsibility is to keep eurozone prices stable.

Last week, ECB chief Mario Draghi insisted that the programme of buying up the sovereign bonds of debt-wracked countries ws limited and temporary.

© 2011 AFP

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