EU rules out aid boost, banks on ECB

European finance ministers ruled out immediate aid for Portugal and Spain or an increase in the 750 billion-euro ($1 trillion) crisis fund, counting on European Central Bank bond purchases to calm debt-spooked markets.

A week after handing Ireland an 85 billion-euro lifeline, the finance chiefs voiced confidence that Spain and Portugal will tame their budget deficits and said the existing credit line is enough to defend them in an emergency.

“We’re not starting a fresh debate every week,” German Finance Minister Wolfgang Schaeuble told reporters in Brussels before a two-day meeting winds up. “What we have set in motion are the right measures and will lead to us convincing financial markets that we have a stable currency in Europe and will solve the problems.”

A 22-week high in ECB bond-buying brought a respite from speculative attacks, masking divisions between the 16 euro-area governments over the next steps to fight the explosion of debt that threatens the currency.

As the Irish parliament prepared to approve spending cuts, finance ministers from all 27 European Union countries endorsed the EU budget’s 22.5 billion-euro share of the support program and gave Ireland an extra year, until 2015, to bring its deficit down to European limits.

“As the market ‘wolves’ are likely to keep huffing and puffing, we believe that European leaders will ultimately take further steps rather than have the house blown down,” Michala Marcussen, head of global economics at Societe Generale SA in London, said in an e-mailed note. “For now, the ECB remains the best line of defence.”

European bonds fell today, with Portugal, Spain and Italy among the worst performers, as investors poured money into stocks. Portugal’s extra yield over German 10-year bonds rose 4 basis points to 313 basis points.