The amount of cash deposited by eurozone banks overnight at the European Central Bank hit a fresh record on Friday, coming just two days after financial institutions took advantage of an offer of unlimited cheap loans. Banks parked €776.9bn overnight in the ECB deposit facility - for which they earn just 0.25 per cent - on Thursday, up by nearly two-thirds or €300bn from the previous day. Under the ECB's longer-term refinancing operation, 800 banks on Wednesday took €529.5bn of three-year loans at 1 per cent. Stripping out money rolling over from other refinancing operations, analysts estimate about €310bn of new liquidity was created. Central bankers play down the significance of any rise in deposits, saying that it is an automatic side-effect of the ECB increasing its balance sheet through the LTRO and does not show that banks are opting for safety first. Use of the ECB deposit facility jumped after the previous LTRO in December, with banks placing about €450bn in late December, a level that they have roughly maintained ever since. But many analysts downplay its broader significance, saying that use of the facility was always likely to rise after the latest LTRO. Still, economists say that Italian and Spanish banks have been much more likely to use their LTRO cash to buy government debt than those from countries such as Germany. The LTRO has been praised by many investors and bankers for taking away the prospect of bank failure due to financing problems, especially as the amount of bank debt coming due in the next few years was high by historical standards. The improved market sentiment that followed December's LTRO allowed European banks to return to the public bond markets in January after a sluggish end to 2011. However, while there has been a steady stream of senior unsecured debt and covered bond issues by banks over the past two months, some analysts say that there are not enough issues hitting the market to match demand from cash-rich investors. Italian benchmark sovereign bond yields, which have fallen sharply since the first LTRO in December, on Friday crossed over with those of Spain for the first time since last summer, due partly to bad news about the Spanish deficit. Additional reporting by Mary Watkins in London