Germany favours possible ECB capital increase: source

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German government sources said Tuesday they would be in favour of a possible European Central Bank capital increase to shore up confidence amid an ongoing crisis in eurozone bond markets.

Berlin would "view positively" such a move, the source said after another European source close to the matter told AFP that ECB governors would discuss the issue at a regular meeting on Thursday.

"I cannot rule out that (ECB President Jean-Claude) Trichet will bring this up. Germany has always said it would support the ECB," the Berlin source said.

"This capital increase ... would be for markets to see that the ECB is well capitalised if it buys more bonds."

The ECB's capital currently stands at almost 5.8 billion euros (eight billion dollars).

Press reports said a capital increase would strengthen the ECB's safety net as it deals with risk linked to purchases of public debt issued by weaker eurozone countries like Greece, Ireland and Portugal.

Last week, the central bank bought almost 2.7 billion euros worth of sovereign bonds, bringing the total of its purchases to around 72 billion euros since the Greek debt crisis worsened in May.

© 2010 AFP

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