The European Central Bank entered uncharted territory yesterday by buying eurozone government bonds as part of a massive financial support scheme that cheered markets and eased pressure on the area's most indebted countries.

European shares, led by financial stocks, rose sharply, as well as Irish and Portuguese bond prices. The Greek bond market saw its largest one-day gain since Greece entered the eurozone in 2001. Tensions eased in money markets and the euro rose at one point by more than 2 per cent against the US dollar.

However, the ECB's action provoked a rare public split on its governing council when Germany's Axel Weber, the Bundesbank president, said he viewed the step critically “even in this exceptional situation” because of its inflationary risks.