Worried bankers from 47 European groups urged the ECB to become a "buyer of last resort" of eurozone government bonds to steady markets. Moreover, the cost for European banks to insure themselves against default rose to levels last seen after Lehman's collapse.
The Financial Times reports that Europe's banks made a desperate appeal for the European Central Bank to buy the bonds of crisis-hit eurozone members, as a fresh day of turmoil in markets battered share prices around the globe.
Fears that a debt default by Greece could paralyse the world's financial system - just as the collapse of Lehman Brothers did two years ago - sparked another wave of heavy selling in Asian, European and US stock markets.
Bank shares were the hardest hit, with those in Europe seen as the most exposed if Greece failed to repay its debt falling by up to 9 per cent.
Worried bankers from 47 European groups urged the ECB to become a "buyer of last resort" of eurozone government bonds to steady markets.
There was speculation that the central bank could be preparing a €600bn (£517bn) loan facility for one-year loans at 1 per cent to help more than 1,000 banks in their funding.
But as European leaders met in Brussels to give their formal approval to a three-year €110bn rescue plan for Greece, there was no sign of imminent ECB action. Finance ministers of the Eurozone countries will meet tomorrow for more talks.
French officials said it was imperative for Europe to act to stop the crisis escalating, but conceded there was no consensus on how to proceed.
Jean-Claude Trichet, ECB president, said this week that its governing council had not discussed the purchase of government bonds at its meeting in Lisbon. But he added that it was willing to respond to events.
The cost for European banks to insure themselves against default rose to levels last seen after Lehman's collapse.
© Financial Times
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