ECB ready to act if banks need more liquidity The European Central Bank is ready to inject more liquidity into banks "if needed," Mario Draghi, its president, said on Monday, despite further signs that the eurozone is sustaining its weak recovery. Speaking in Brussels, Mr Draghi said the bank stood ready to conduct another round of liquidity-providing operations for banks in the form of a long-term refinancing operation or LTRO, which it used in 2011 and 2012 to inject €1tn in cheap three-year loans into the banking system. The early repayment of many of those loans has been welcomed as a sign of normality returning to the interbank lending market in Europe, but some banks have expressed concern that the maturity of the loans in early 2015 could act as a "cliff" that was weighing on markets. A recent, now partly reversed, rise in short-term money market interest rates had also sparked concern that financial markets, which are focused on the US Federal Reserve's plans to cut back on quantitative easing, were not heeding the ECB's "forward guidance" pledge to keep interest rates at or below their current record lows for an extended period. "We are ready to use any instrument, including another LTRO if needed, to maintain short-term money market rates at a level which is warranted by our assessment of inflation in the medium term," Mr Draghi told the European Parliament's economic and monetary affairs committee. Earlier, a leading business survey showed that eurozone business activity rose for a third successive month. Mr Draghi said the data had "given some support to the view that euro area economic activity should continue its slow recovery in the current quarter, despite weak production data for July." The Markit purchasing managers" index rose to 52.1 in September from 51.5 in August, according to a "flash" or initial reading of its composite output index, which combines both manufacturing and services. Any reading above 50.0 signals growth, and the index, which has risen for six consecutive months, is now at a 27-month high. A country-specific survey of France, the bloc's second-biggest economy, showed it had managed to end an 18-month contractionary period as the composite output index rose to 50.2 in September from 48.8 in August. However, this was principally due to an improvement in the services sector which offset a sharper fall in manufacturing output. Chris Williamson, Markit's chief economist, said the eurozone data "add to growing signs that the region is recovering from the longest recession in its history" and were consistent with gross domestic product growth forecasts of 0.2 per cent in the third quarter. The low pace of growth highlights the fragility of the recovery. Output remains below the level it was before the eurozone's financial crisis. The data are likely to persuade the ECB's policy makers to keep their stance unchanged - the bank has pledged to keep rates at or below their current record low of 0.5 per cent for an extended period. The policy, known as forward guidance, has, however, not been fully reflected in short-term money market forecasts of likely interest rates. Markit said its survey of 5,000 companies across the manufacturing and services sector showed an improvement in new business, with orders rising for the second successive month across both broad sectors. However, unemployment continued to creep up, albeit at a very modest pace and the manufacturing component, while still in growth territory, fell back from the August reading. In Germany, where Angela Merkel was celebrating a general election victory, Markit's composite output index rose to 53.8 from 53.5 in August, an eight-month high, driven by the services sector. "Survey respondents suggested that expectations are particularly buoyant for demand within the domestic-focused service sector over the months ahead," Tim Moore, senior economist at Markit, said of the German survey. The Bundesbank said in its monthly report that the German economy was on an upward trend in coming months and, crucially, company investment data provided a solid foundation, even if there was no "dramatic upswing."