RPT-ECB fails to fully offset bond purchases

(Repeats to wider subscribers)

FRANKFURT Nov 29 (Reuters) - The European Central Bank failed to attract the 203.5 billion euros from banks on Tuesday needed to offset its euro zone government bond purchases, instead managing to draw just over 194 billion euros.

The failure was the ECB's first since May. The pace of the ECB's government bond purchases picked up last week as the bank spent 8.6 billion euros in its ongoing attempt to calm euro zone debt markets.

The central bank takes seven-day deposits from commercial banks on a weekly basis to offset its spending in order to ensure inflation pressures do not build up due to additional money in the financial system.

The ECB paid a weighted average interest rate of 0.62 percent on funds deposited by banks compared with 0.60 percent last week. A total of 85 banks offered up funds, down slightly from 85 last week. (Click for full details)

The ECB can buy government and corporate bonds under its purchase programme but has not revealed how much it can spend or for how long it intends to buy them.

Analysts think that the bank is buying government debt of euro zone trouble spots Italy and Spain after previously targeting Greece, Ireland and Portugal debt, and that it will have to buy more to help allay market fears.

Italy's borrowing costs hit a euro lifetime peak of nearly 8 percent on Tuesday as pressure on euro zone finance ministers intensified to staunch a two-year-old debt crisis that is blighting the world economy. (Reporting by Sakari Suoninen)