ECB buys 2.3 bln euros in bonds

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The European Central Bank said Monday that it bought 2.3 billion euros ($3.1 billion) worth of eurozone government bonds last week, the highest amount since mid-December.

Total purchases of public debt from commercial banks under the controversial Securities Markets Programme that began in May now amount to 76.5 billion euros, an ECB statement added.

On January 10, the bank had reported weekly purchases of 113 million euros, but bond dealers noted a surge in buying early last week before Portugal held a successful bond issue worth 1.25 billion euros that was closely watched by investors.

Heavy purchases of Portuguese bonds would have helped curb the cost of borrowing for Lisbon in the subsequent operation.

The ECB has assumed increasing risk through its purchases of bonds issued by countries like Greece, Ireland and Portugal as part of a wider debt crisis plan that is also backed by the European Union and International Monetary Fund.

The central bank is urging EU political leaders to bolster an emergency fund known as the European Financial Stability Facility however and give it more flexibility so governments assume more responsibility for emergency financing.

One idea under consideration is to allow the EFSF to take over the role of purchasing eurozone government debt from the ECB, which only agreed to assume the unorthodox role amid the Greek debt crisis in May.

© 2011 AFP

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