Oct. 4 - As widely expected, the European Central Bank kept interest rates on hold and ECB President Mario Draghi said they were primed to buy troubled euro zone bonds when conditions were right. Spain also 4 billion euros of bonds, as investors wait for it to request a bailout. Joanna Partridge reports.
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Spain still hasn't asked for a European bailout - and for the moment, investors still want to buy its debt.
Madrid sold almost 4 billion euros of bonds on Thursday
Demand was higher than in previous auctions and Spain's borrowing costs fell on two of the bonds.
The reason - investors are confident Madrid will ask for aid, triggering an ECB bond-buying programme seen as key to tackling the debt crisis, says Carsten Brzeski from ING.
SOUNDBITE: Carsten Brzeski, Senior Economist, ING, saying (English):
"We've seen there is a lot of resistance from the Spanish government to go to the euro zone to ask for a bailout. But pressure is increasing and it also looks as if the German opposition to give Spain some rescue money is weakening, so I think it's just a matter of weeks."
It's a month since ECB President Mario Draghi unveiled his so-called OMT plan to buy bonds of troubled euro zone countries .
At this month's meeting, the bank kept interest rates on hold - as expected - and said it was well-prepared.
SOUNDBITE: Mario Draghi, European Central Bank President, saying (English):
"Today we are ready with our OMT, we are, we have a fully effective backstop mechanism in place once all the necessary prerequisites are in place as well."
Draghi insisted his purchase plan had already calmed financial markets.
But the situation in Europe remains tense.
Madrid's reluctance to seek a bailout has left many worrying it won't be able to meet its deficit reduction targets as the country slides further into recession.
European shares slipped slightly after Draghi said the bank hadn't discussed further rate cuts.
Frankfurt trader Robert Halver.
SOUNDBITE: Robert Halver, Trader with Baader Bank, saying (German):
"Draghi can't do much more in advance, firstly he has to keep rates steady. And two things have to take place. For the Greeks, we need to see the Troika's report. And Spain has to request a rescue package. Then Draghi can deliver and lower rates to 0.5%."
The financial markets hate uncertainty.
But they're having to get used to it.
Joanna Partridge, Reuters
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