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ECB Begins Stimulus Purchases          10/20 06:29

   FRANKFURT, Germany (AP) -- The European Central Bank has started buying 
securities called covered bonds as it launches its latest stimulus effort aimed 
at preventing the 18-country eurozone economy from sinking back into recession.

   An ECB spokeswoman confirmed the purchases began Monday.

   Covered bonds are investments backed by loans such as mortgages. They carry 
extra protections for investors, which sets them apart from other such 
asset-backed bonds made from bundled loans.

   The ECB is buying them to encourage banks to make the underlying loans. The 
idea is to get more credit moving to businesses in a eurozone economy that 
didn't grow at all in the second quarter.

   The ECB stimulus efforts also include offers of extra-cheap loans to banks, 
based on how much they are lending to companies.


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