Draghi says ECB primed to buy bonds when ready

Thu Oct 4, 2012 9:18am EDT
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By Eva Kuehnen

BRDO PRI KRANJU, Slovenia (Reuters) - European Central Bank President Mario Draghi said on Thursday the ECB was primed to buy troubled euro zone bonds when conditions were right and that this had already calmed financial market tension.

Speaking at his regular monthly news conference, Draghi also said "significant progress" had been made in Spain to bring its finances into order, although more was needed.

He said the euro zone's economy was expected to remain weak but that near-term price increases had led to the ECB keeping rates on hold.

A month after Draghi unveiled a bond-purchase program for struggling euro states that was hailed by many as a savior for the single currency bloc, investors are still waiting for Spain to bite the bullet and request a formal rescue.

Before it does, the ECB cannot act, and markets are likely to remain jittery.

But Draghi was upbeat about Spain's attempts to end its crisis.

"Significant progress has been made," he said. "Significant challenges remain as well".

He refused to comment, however, on whether Spanish bond yields were at appropriate levels. An auction earlier on Thursday saw Spanish borrowing costs fall in most cases   Continued...

A demonstrator holds a placard as he stands at the euro sculpture in front of the headquarters of the European Central Bank (ECB) during an anti-capitalism demonstration in Frankfurt, September 29, 2012. REUTERS/Kai Pfaffenbach