Traders said the European Central Bank buying was focused on the 5-year sector of the curve, where Italian yields dropped 65 basis points to 4.85 percent, while the Spanish equivalent was 69 bps lower at 4.734 percent.

"They're doing 20 to 25 million (euro) clips and they're spreading it around the market," said a trader. "We expect them to do billions today."

The euro extended gains against the dollar on the reports of ECB buying, rising to around $1.4395 from $1.4360 to trade 0.8 percent higher on the day.

Copyright Reuters, 2011