ECB boosts liquidity, holds rates

The European Central Bank (ECB) has voted to hold interest rates and will boost liquidity in the eurozone in an attempt to prevent the sovereign debt crisis from spreading to Italy and Spain.

ECB president Jean-Claude Trichet said the Bank is buying government bonds and offering unlimited funds to banks until at least the year end, after coming under pressure following a sharp escalation in the debt crisis in recent weeks. The Bank held interest rates at 1.5% - a pause after two hikes since April - and the interest rate on its deposit facility will remain at 0.75%, while the rate on the marginal lending facility will stay at 2.25%. Reuters reported traders saw the ECB buying Portuguese and Irish government bonds across the curve in the secondary market this afternoon, alth...