The European Central Bank halved its purchases of government bonds last week despite alarm bells ringing loudly in the eurozone as Italy's borrowing costs hit unsustainable levels.
Last week's purchases of 4.478 billion euros were less than half the previous week's, when the ECB spent 9.52 billion, the most since mid-September. The overall total of the program rose to 187 billion euros.
Last week's purchases came in well below analysts' expectations of 10 billion euros.
The decline in spending came in the first full week of Mario Draghi's leadership at the bank after he took over from Jean-Claude Trichet, and as the ECB continues to publicly resist political pressure — including from the United States, Britain and Russia — to step up the purchases to better shield Italy, Spain and other debt-strained euro states.
Bundesbank President Jens Weidmann said on Monday international pressure for the ECB to play a bigger role in tackling the eurozone debt crisis must end as it could undermine the ECB's hard-won credibility.
Draghi, in his first news conference as ECB president earlier this month, offered no commitment to scale up the bank's bond-buying, instead describing it as "limited."
"The bigger picture is really of the ECB's role, which is limited and not big enough to be a game-changer," ABN Amro economist Nick Kounis said. "All the signals we're getting from the ECB is that they are not going to seriously step up bond purchases."
Juxtaposing Draghi's deliberately guarded words at the ECB news conference, traders say the ECB has been steadily buying Italian and Spanish bonds since he took over as president.
The interventions have failed to cap a steady climb in borrowing costs, however.
Italy paid a record 6.29 percent yield to sell five-year bonds on Monday in the first auction held after former European Commissioner Mario Monti was asked to head an emergency government charged with tackling the debt crisis.
Italy last week saw bond yields soar past the 7 percent level that has triggered international bailouts of Ireland and Portugal. At the worst of last week's market turmoil it had peaked at around 7.8 percent.
The ECB reactivated its bond-buying — known as the Securities Markets Programme — in August after a four month break as the crisis moved to Italy and Spain, two of the eurozone's biggest economies. It was first started in May 2010.
Under the program, the ECB and the 17 eurozone national central banks can buy government and corporate bonds from banks and other investors, but not directly from governments. It is designed to keep bond markets in check and ensure the full benefit of the ECB's low interest rates are felt across the 17-country bloc.
The central bank does not give a country-by-country breakdown of its purchases. However, analysts and traders estimate it has bought around 45 billion euros of Greek debt and has concentrated largely on Italian and Spanish debt with the 115 billion euros it has spent since restarting its purchases in early August.
The ECB's bond purchases are reported every week but take two to three days to settle, meaning that when the bank is buying, the figures do not necessarily give the full picture.
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