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ECB provides 530bn euros of cheap loans for banks | ECB provides 530bn euros of cheap loans for banks |
(40 minutes later) | |
The European Central Bank (ECB) has provided a further 530bn euros ($713bn; £448bn) of low-interest loans to 800 banks across the European Union. | |
It is the second time the ECB has offered such three-year loans and comes after 489bn euros was lent in December. | It is the second time the ECB has offered such three-year loans and comes after 489bn euros was lent in December. |
The loans are aimed to help continue to ease the eurozone debt crisis, and help banks improve their liquidity. | The loans are aimed to help continue to ease the eurozone debt crisis, and help banks improve their liquidity. |
They have also helped countries such as Italy, as some banks have used the bonds to buy government bonds. | |
'Unprecedented expansion' | |
The markets appear to have welcomed the announcement, with banking shares rising strongly. | The markets appear to have welcomed the announcement, with banking shares rising strongly. |
Although the ECB has not revealed which banks have taken part, in Germany, shares in Commerzbank were up 3.6%, followed by Deutsche Bank which added 1.7%. | |
Credit Agricole saw the biggest gains in France, climbing 4.5%, followed by Societe Generale, which rose 2.3%. | |
In the UK, shares in Barclays were up 1.7%. | |
Commentators said that the amount of money lent, and the number of banks which had taken part, was in line with expectations. | Commentators said that the amount of money lent, and the number of banks which had taken part, was in line with expectations. |
Banking analyst Luca Cazzulani of Unicredit said: "This will increase the level of excess liquidity pretty sharply, which is ultimately positive or very positive for risk trades. | Banking analyst Luca Cazzulani of Unicredit said: "This will increase the level of excess liquidity pretty sharply, which is ultimately positive or very positive for risk trades. |
"Italian and Spanish bonds are likely to benefit from this and equity markets as well." | "Italian and Spanish bonds are likely to benefit from this and equity markets as well." |
BBC business editor Robert Peston said the central bank's move represented "a massive, perhaps unprecedented, expansion of the ECB's balance sheet". |