THE EUROPEAN CENTRAL BANK continued to wind down its purchases of Spanish and Italian government bonds, according to data issued today.

The ECB spent €6.65bn on its bond-buying programme last week, down from €14.3bn the previous week and €22bn a fortnight ago.

The controversial programme was revived three weeks ago amid concerns that Spain and Italy – two of Europe’s largest economies – could be priced out of the regular money markets and forced to seek a European bailout.

The ECB now holds a total of €115.5bn in Eurozone bonds – including a sizeable amount of Irish bonds – and said it intended to continue its bond-buying programme for at least another week.

Bloomberg reports that Italy is preparing a bond auction this week, trying to raise €3.75bn in a move that will be a key indicator of whether the medium-term threat of needing a bailout has been averted.

The market cost of borrowing for Italy has risen back above the 5 per cent mark in recent days, and neared 5.1 per cent for a 10-year loan today, though it remains well below the 6.4 per cent mark it touched before the ECB’s purchases kicked in.

In Spain’s case, the cost of borrowing is almost precisely 5 per cent, down from 6.3 per cent three weeks ago.