The European Central Bank needs to back up last week's recordpurchases of government debt with further buying to preventspeculators from driving borrowing costs for Spain and Italy backup again.

“The ECB's bond purchase program has been a very effectivedeterrent to panic selling, and as long as they don't blink now,they can have this problem of speculative shorting licked in weeksrather than months,” said Luca Jellinek, the London-based head ofEuropean rate strategy at Credit Agricole Corporate &Investment Bank.

The ECB snapped a five-month hiatus to buy 22 billion euros($31.7 billion) of government bonds in the week through Aug. 12,and has bought more securities since. That helped push 10-yearSpanish and Italian yields below 5 percent after they surged toeuro-era records the previous week amid concern contagion from thedebt crisis had infected both countries.