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ECB to ease off bond buying

ECB chiefs have called for swift political action to curb the crisis in the Eurozone.

Incoming bank chief Mario Draghi (right) said that nobody should assume the ECB will buy bonds indefinitely, despite it doubling its purchases last week to help Italy.

Major banks in the European markets suffered a massive wholesale sell-off of their shares yesterday.

Shares were affected after US authorities hit 17 major banks with lawsuits over losses on mortgage-backed securities that lost value in the 2008 financial crisis, costing taxpayers tens of billions of dollars.

But ECB president Jean-Claude Trichet, who retires next month, called on Eurozone governments immediately to approve measures to strengthen the European Financial Stability Facility bailout fund, from which Ireland draws rescue loans.

The ECB is concerned that its efforts to hold down borrowing costs for Italy -- the Eurozone's third-largest economy -- are encouraging Italy's government to slacken efforts to shore up its finances.

The announcement comes as the impact of the ECB bond- buying campaign showed signs of wearing off, as Italian and Spanish borrowing costs reached their highest levels in nearly a month.

The ECB raised bond purchases to €13,305bn last week.