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Banks selling most debt in Europe since 2010 amid stimulus bets

[LONDON] Banks sold the most bonds in euros and pounds in at least five years this week as speculation the European Central Bank will widen its stimulus program pushed borrowing costs to record lows.

Lenders including BNP Paribas SA and Rabobank Groep raised 30 billion euros (US$35 billion) in the past four days, the most since the week ending Jan 17, 2010, according to data compiled by Bloomberg.

The average yield on financial bonds in euros fell to 1.07 per cent, Bank of America Merrill Lynch index data show.

The European Central Bank is studying the US and UK's experiences with quantitative easing to determine the volume of bonds it may buy to stimulate growth and ward off price falls, executive board member Benoit Coeure said in an interview with Liberation newspaper.

The ECB has already bought more than 30 billion euros of covered bonds to inject cash into the banking system.

"Expectations of ECB bond buying are holding down spreads," said Hank Calenti, an analyst at Wells Fargo & Co in London.

"The ECB's purchase program is probably creating some scarcity value." Covered bond issuance climbed to a four-month high of 13.7 billion euros this week, data compiled by Bloomberg show.

BLOOMBERG