ECB bond purchases rise to 338 million euros: data

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Government bond purchases by the European Central Bank rose last week, ECB data showed Monday, suggesting it was too early to sound the all-clear on a key eurozone financial market.

The ECB bought 338 million euros (430 million dollars) in eurozone government bonds, a relatively small amount but nonetheless well above the 10 million euros in bonds purchased a week earlier.

By comparison, in the first two weeks of the bank's Securities Markets Programme in May, the bank bought more than 26 billion euros worth of bonds, mainly those issued by Greece, Ireland, Portugal and Spain.

The ECB offsets such public bond purchases by taking in an equal amount of one-week deposits from commercial banks so the operations do not increase the amount of money in circulation, which could fuel inflation.

"It is striking perhaps because it is a step up compared with previous weeks but by itself it is not a large amount," UniCredit fixed income strategist Luca Cazzulani told AFP.

The economist could not confirm market speculation the purchases focused on Irish bonds but added that in light of higher rates for Greek bonds "they most likely have not bought anything on Greece."

© 2010 AFP

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