"The European Central Bank decided on several measures to address the severe tensions in certain market segments which are hampering the monetary policy transmission mechanism and thereby the effective conduct of monetary policy," it said in a statement after European Union finance ministers announced a euro crisis package that with International Monetary Fund support could reach 750 billion euros (US$972.6 billion).

Under the three-year plan, the European Commission - the EU's governing body - will make 60 billion euros available while countries from the 16-nation eurozone would promise backing for 440 billion euros. The IMF would contribute an additional sum of at least half of the EU's total contribution, or 250 billion euros.

The scope of the bond purchases is yet to be determined, but the ECB said they would be offset by liquidity-absorbing operations so that the stance of monetary policy is unaffected.

Under the plan, agreed late on Sunday, the ECB will buy and sell both government and private bonds on the secondary market.

The euro rallied above US$1.30 and European shares shot up 6 percent, while the premium investors demand to hold Greek government bonds plummeted by nearly 600 basis points after the rescue package was announced.

"This truly is overwhelming force, and should be more than sufficient to stabilize markets in the near term, prevent panic and contain the risk of contagion," Marco Annunziata from UniCredit Group in London said of the overall deal. He said the ECB's decision to intervene in the secondary market should offset concerns about the time it will take to deploy the stabilization funds.

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