The European Central Bank has launched a package of measures to shield the eurozone from the economic havoc created by coronavirus, further loosening its already ultra-easy monetary policy with a planned €120bn of bond purchases and more cheap loans to banks.

In the first monetary stimulus move since Christine Lagarde took charge of the ECB in November, it said its main deposit rate would remain unchanged at its existing record low level of minus 0.5 per cent.

But the ECB announced an increase in its quantitative easing programme of asset purchases to buy €120bn more bonds by the end of this year, on top of its existing commitment to buy €20bn a month. It also said it would launch a new programme of cheap loans to banks to encourage them to keep lending to small businesses.

As a growing swath of the region's economy is shut down by measures imposed to contain the spread of coronavirus, and financial markets fall sharply, economists fear the eurozone may suffer its first recession since its sovereign debt crisis seven years ago.

Pressure had been rising on the ECB to take action after the Bank of England and the US Federal Reserve both announced emergency rate cuts and other measures in response to the economic impact of coronavirus in recent days.

The ECB met just hours after US president Donald Trump banned non-American citizens travelling from much of Europe to the US for the next 30 days, raising the prospect of further economic disruption and sending financial markets into a fresh tailspin.

The ECB said in a statement: "Although the governing council does not see material signs of strains in money markets or liquidity shortages in the banking system, these operations will provide an effective backstop in case of need."

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