Wednesday, November 16, 2011

European Central Bank steps in to counter bond rout

The European Central Bank stepped in to stem an accelerating sell-off of euro zone government bonds today, traders said, after the United States called for more decisive action to halt a spreading sovereign debt crisis.

European shares and the bonds of weaker euro zone countries recovered initially on the move on the day Italian Prime Minister-designate Mario Monti was to name a national unity government to implement long delayed structural economic reforms.

But ECB policymakers continue to reject growing international calls to intervene decisively as Europe's lender of last resort, stressing it is up to governments to resolve the debt crisis through austerity measures and reforms.

But there was no sign that the bond-buying signalled a change in the ECB's policy of limited, stop-go purchases to stabilise markets temporarily while maintaining pressure on governments.