European banks tap ECB for record €529.5bn A total of 800 banks lined up to borrow new cash at an exceptionally low interest rate of 1pc in the central bank's second three-year long-term refinancing operation - or LTRO - after already borrowing €489.19bn in a first such operation in December. The volume, and the number of banks, was way above analysts' expectations. European stock gained while the euro dipped to a session low against the dollar of $1.3435 in volatile trade and German Bunds extended losses. The ECB launched the ultra-long loans back in December with the aim of averting a credit squeeze in the 17 countries which share the euro, hoping that the money will be lent to households and businesses. Anders Matzen, an analyst at Nordea, said: "This is an astonishing amount ... This is one further step away from the abyss of the debt crisis that we saw before Christmas. The effect of the LTRO is basically like valium for financial markets. There are suggestions that banks could use part of the funds to buy sovereign bonds from countries in eurozone's periphery, but the higher-than-expected take-up could be a sign that banks expect funding stress to continue. Fabrice Couste, the head of CMC Markets France, said: "It can be seen either as glass half-empty, that is to say that banks are rushing to the ECB's till because they expect fresh difficulties ahead ... or glass half-full, given that the general environment has improved a lot since December and banks would be stupid to pass on this offer of cheap funding."