The European Central Bank said yesterday that there were “tentative” signs of economic stabilisation in the eurozone as successful Spanish and Italian government bond auctions also pointed to at least a temporary easing of the debt crisis.

Although Mario Draghi, ECB president, tempered his cautiously optimistic tone by saying that financial market tensions continued to hit eurozone economic activity, markets reacted positively to his comments and the bond auctions. The euro gained almost 1 per cent against the US dollar.

The ECB’s provision last month of €489bn in three-year loans to eurozone banks had, meanwhile, averted liquidity shortages in the financial system and reduced the risk of a “credit crunch” significantly worsening the eurozone’s economic outlook, he said.