ECB chief Draghi vows total support for euro

European Central Bank chief Mario Draghi vowed unconditional support for the beleaguered euro Thursday, sending markets into orbit as traders eyed further action from the bank to shore up the eurozone.

In apparently unscripted comments in London, the normally reserved Draghi said his institution was "ready to do whatever it takes to preserve the euro. And believe me it will be enough."

Stressing that the euro was "irreversible", Draghi said that part of his bank's remit was to keep sovereign debt levels under control when they hampered the proper functioning of interest rate policy.

Analysts saw Draghi's comment as a hint the ECB could soon reintroduce its hotly contested programme of buying up the bonds of struggling eurozone countries that has lain dormant for several months.

As Spanish borrowing costs soared over seven percent earlier this week -- the level that forced Ireland, Portugal and Greece into bailouts -- the bank has come under increasing pressure to restart the programme.

And Draghi's hints had an immediate impact on borrowing costs, with Spain's shooting below the seven-percent mark and Italian costs plummeting to just above six percent.

The comments also sent stock markets into euphoric mood and boosted the euro on the foreign exchange markets after several days of painful declines amid fresh speculation the eurozone might implode or Spain might need a bailout.

ABN Amro economist Nick Kounis said that Draghi had "opened the door for a restart of the central bank's government bond purchase programme", untapped since February.

"The crisis response looks likely to focus on direct intervention in the government bond market," he added.

And CMC Markets analyst Michael Hewson told AFP that Draghi's remarks "suggest that the ECB may well do something about capping rising bond yields."

Attention would now turn to Draghi's monthly news conference in Frankfurt next Thursday "to see if he means what he says," the analyst added.

Since the eurozone sovereign debt crisis erupted more than two and a half years ago, the ECB has won praise as the only European institution that has acted quickly and decisively to stem the turmoil.

It has cut interest rates to a record low level of 0.75 percent and flooded banks with more than one trillion euros ($1.22 trillion) of ultra-cheap loans in a bid to stimulate lending and get the economy moving again.

ECB officials have never ceased to repeat that such measures are only temporary and merely meant to buy time for governments to tackle the root causes of the crisis -- profligate spending.

Draghi insisted again in his London speech that the ECB did not want to "supplement actions that have to be taken by governments."

"That is not our job," he insisted.

But the central bank chief did praise efforts taken by EU leaders to fight the flames saying that "progress has been extraordinary in the last six months".

Meanwhile, another top European official was on his way to Greece, the birthplace of the eurozone crisis, as the International Monetary Fund said talks with Athens over its bailout programme would last into September.

European Commission President Jose Manuel Barroso flew to Athens to meet Greek Prime Minister Antonis Samaras as finance ministry officials unveiled a list of spending cuts worth some 11.6 billion euros.

The spending cuts, reportedly to come largely from pensions, health care and benefits, are designed to help Greece negotiate a longer fiscal overhaul to cope with a deep recession, a finance ministry official said.

Auditors from the IMF, the European Union and the ECB are in Athens to judge Greece's progress towards making economic reforms seen as vital to haul the debt-wracked country out of a crippling depression.

The audit report will determine whether Greece will receive a 31.5-billion-euro tranche from a EU-IMF loan programme it desperately needs to keep the economy afloat.

-- Dow Jones Newswires contributed to this report --