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ECB Steps Up Purchases of Italian, Spanish Bonds

The European Central Bank was buying Italian and Spanish government bonds in the markets on Thursday, traders told CNBC.

The ECB started buying bonds from the two governments in early August, having welcomed promises from Spain and Italy to speed up reform.

According to one trader in a brokerage house, the ECB wasn’t all that active in the earlier part of this week. If it had kept at that rate, the central banks’ total purchases this week would not have exceeded 5 billion euros ($6.76 billion), the trader said.

Traders did not elaborate on the size of the ECB’ purchases on Thursday but said they saw “big orders” coming through as the central bank stepped up its buying.

In early August, the ECB said “it will actively implement its Securities Markets Programme. This programme has been designed to help restoring a better transmission of our monetary policy decisions—taking account of dysfunctional market segments—and therefore to ensure price stability in the euro area.”

European stocks were hit Thursday morning by disappointment over the Federal Reserve’ gloomy outlook for the global economy and by lingering fears over the euro zone debt crisis.

The euro also fell after the Fed’ announcement.

According to Reuters, the spread between Italian and German 10-year yields narrowed to 407 basis points from 413 basis points earlier. The spread hit a lifetime high of 416 basis points in August before the ECB begun its purchases.

Source: CNBC