Spanish banks increased their government bond holdings by 8.5 billion euros after a 2.9 billion fall in August. In the four months to March, that figure had risen by 77 billion euros as banks stocked up on government bonds with the long-term money they received from the central bank.

Their total sovereign holdings, adjusted by market value, rose to 255.5 billion euros in September.

Italian banks also bought more securities issued by euro zone governments, spending a net of 5.1 billion euros and theit total value rising to 351.2 billion.

The ECB data do not break down which countries' debt banks hold, but the figures give a good picture of how much of the 1 trillion euros the ECB has pumped into the market in twin 3-year liquidity operations is finding its way into the government bond market.

Portuguese banks increased their holdings of government debt by 1.1 billion euros, the data showed.

Use of the ECB's cash - lent at an interest rate tied to its benchmark rate, currently at 0.75 percent, to buy higher yielding government debt became known as the "Sarkozy trade" after former French President Nicolas Sarkozy urged banks to use the money for that purpose.