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ECB to Buy Euro-Zone Bonds Again, as Contagion Spreads?

•, By Geoffrey T. Smith

The European Central Bank may ultimately have to revive its controversial program of buying euro-zone government bonds if the flight out of Spanish and Italian bonds continues, analysts say.

Such a development probably isn’t imminent: although 10-year Spanish government bond yields rose sharply to over 5.9% Tuesday as trading resumed after the Easter break, that’s still well away from the 7% level that economists say means impending doom.

But the pace of the increase in recent days has unsettled many–as have signs of the nervousness spreading to Italy. Italian yields rose 21 basis points Tuesday to 5.66%.

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