ECB's Draghi faces leadership test over euro pledge

European Central Bank President Mario Draghi faces intense pressure from investors, European leaders and even the United States to deliver on Thursday on his pledge to do whatever it takes to save the euro.

Draghi will face the biggest test of his nine months' leadership of the central bank when it meets later in the day, and any signs that he overplayed his hand when making the pledge a week ago could see markets punish the euro zone.

The ECB has little margin for error to maintain its credibility and avoid bond yields climbing in the indebted countries on the euro zone periphery.

The market's faith in Draghi will be tested before the 1230 GMT post-meeting press conference by a Spanish bond auction that could see its debt costs rise.

"Draghi has unfortunately painted himself into a corner," JP Morgan analyst Pavan Wadhwa said in a conference call.

"The ECB does need to demonstrate its credibility ... Otherwise Draghi will lose face completely."

While central bank sources have told Reuters that bold action is probably at least five weeks away, Draghi may offer some clues on what is in the offing. He said last Thursday that the political capital invested in the euro is often underestimated.

"Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough," Draghi told an investment conference in London.

Spanish and Italian bond yields fell markedly after Draghi's speech, and inaction could send them higher again.

"We could see markets going back to where they were before last Thursday," said Nordea analyst Anders Svendsen, who expects more words but little concrete action from the meeting.

Other countries, especially the United States, have sought to raise pressure on the ECB to act. US Treasury Secretary Timothy Geithner said the euro zone must take steps to bring down borrowing costs in troubled member states.