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Banks borrowed less than expected from the European Central Bank in a key funding operation.
The lower than expected borrowing came ahead of the July deadline for the repayment of close to half a trillion euros. Fears were eased about the banks' ability to cope as rollover borrowing at the end of the ECB's 12 month funds came in well below expectations.
Banks have to repay 442 billion euros on the one year loan aimed at fighting the financial crisis last year. The ECB says banks borrowed just under 132 billion euros over three months at a flat rate of 1 percent.
The amount is the highest ever borrowed for such a period but pales beside the 442 billion euros of one year money, which banks must repay to the ECB at the beginning of July.
European shares gained on the news while the euro rose across the board. Banks in Greece, Spain and Portugal are increasingly dependent on the ECB as they struggle to borrow due to concerns over their debt and public finances.
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