ECB Buys Bonds in Secondary Markets

Another short-term  European Central Bank patch job.

The ECB intervened in markets by buying Portuguese and Irish bonds in a desperate attempt to muffle the panic surrounding PIIGS finances.

Traders quoted by Reuters said the central bank was buying the bonds in the secondary market just after ECB president Trichet said, answering a question about its SMP program: "I would not be surprised if by the end of this teleconference you will see something on the market."

The euro plunged to the day's low after Trichet announced the liquidity operation. It is now down approx. 1.3% on the day.