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European Central Bank to Buy Italian, Spanish Government Bonds

European Central Bank President Jean-Claude Trichet (file photo)

European Central Bank President Jean-Claude Trichet (file photo)

The European Central Bank has announced that it will buy government bonds from Italy and Spain, in an effort to calm market fears about the euro zone debt crisis.

In a statement issued Sunday, the bank welcomed plans by Italy and Spain for economic reforms and debt-reducing measures, and it urged their speedy implementation.

Central bankers held an emergency telephone conference to help ward off turmoil ahead of the opening of financial markets on Monday.

Officials of the Group of Seven Industrialized countries also held telephone conferences Sunday. In a statement issued late in the day, the officials from Japan, the United States, Britain, Canada, France, Germany and Italy affirmed their commitment to ensuring stability in global financial markets. They pledged "all necessary measures to support financial stability and growth."

Monday is the first trading day for most economies since the Standard and Poor's rating agency on Friday downgraded the United States from its top triple-A bond rating to AA+, the first time in history.

European stock indexes fell sharply on Friday amid worries that the debt-ridden governments of both Italy and Spain, the euro zone's third and fourth largest economies, pose a threat to the shared currency.

Some information for this report was provided by AP, AFP and Reuters.