ECB gearing up to buy euro zone bonds,but not yet

He also indicated that German central bank chief Jens Weidmann had expressed reservations about bond-buying and further efforts would be needed to persuade the Bundesbank before a final vote to take action.

At a news conference following the central banks monthly meeting,Draghi said the bank would consider other non-standard measures to rein in the euro zone crisis. The Governing Council,within its mandate to maintain price stability over the medium term and in observance of its independence in determining monetary policy,may undertake outright open market operations of a size adequate to reach its objective,Draghi said after the bank kept euro zone interest rates at a record low 0.75 per cent.

The bank has already spent 210 billion euros buying bonds under its now dormant Securities Markets Programme (SMP) since May 2010,with limited impact,but Draghi said the new effort would be different in scope and conditionality. Any new ECB action was conditional on euro zone governments using their EFSF and ESM bail out funds first,he said.

Governments must stand ready to activate the ESM/EFSF in the bond market when exceptional financial market circumstances and risks to financial stability exist,he said. Draghi was under intense pressure from investors,European leaders and even the United States to deliver on Thursday on his pledge to do whatever it takes to save the euro by bringing high borrowing costs down and salving the debt crisis.

World reacts

* Global stocks fell after Draghis announcement. The Dow Jones industrial average dropped 134.26 points,S&P 500 15.26 points and Nasdaq Composite Index 18.27 points. European stocks too turned negative,with FTSEurofirst 300 index ending down about 1 per cent

* Italy’s PM Mario Monti has said his country will not seek a bailout

* EU-IMF auditors will hold a meeting with Greek officials this weekend and then return to the country when spending cuts worth 11.5 billion euros are finalised