The European Central Bank made its heaviest interventions in five weeks on the sovereign bond markets last week as eurozone governments sought to prevent a disorderly Greek default and peripheral debt yields rose after bond auctions. ECB figures published on Monday showed the bank doubled its purchases to 4.49 billion euros worth of bonds in the period October 13 - 19 from 2.243 billion the previous week.
---- ECB spent 4.49bn euros, highest since mid-September
It was the highest weekly total since the week ending September 16 and took the programme's overall total to 169.5 billion euros. Some 240 million euros in previously purchased bonds matured last week, the data also showed. Analysts attributed the rise to rising borrowing costs before the weekend's EU summit.
"This was in the run-up to the European leaders' meeting," RBS economist Nick Mattthews said. As usual the ECB said it would hold a "sterilisation" operation on Tuesday at which it takes 1-week deposits from banks to neutralise the inflation pressure the bond purchases create.
Europe is under pressure from its G20 peers to take swift, decisive action to stop the Greek debt crisis engulfing bigger eurozone states and hurting the already weak global recovery. Italy and Spain have been seriously affected and seen their borrowing costs rise strongly over the last two months. At 6 percent the Italian 10-year yield is matching levels which prompted the ECB to start buying Italian and Spanish bonds in the markets on August 8 to support the two countries' battered debt.
The ECB was seen buying 10-year Italian bonds in the market last week to counter a widening in the yield spread between Italian sovereign bonds and their German equivalent, traders said. The ECB reactivated its government bond-buying programme - known as the Securities Markets Programme - in August to keep those costs in check, and to ensure its low interest rates benefit even troubled parts of the eurozone.