Germany is opposed to allowing the purchase of government bonds on the secondary market by two funds established to help eurozone countries, German government sources said today.

One said the idea of “buying bonds on the secondary market is not conceivable”.

The comments come ahead of talks between eurozone governments about ways of improving the effectiveness of a temporary rescue fund, the European Financial Stabilisation Facility (EFSF), and of a permanent fund, the European Stability Mechanism (ESM).

The heads of the European Commission and the European Central Bank have called for the scope of the instruments to be extended and to have more flexibility.

The Commission suggested that the funds could be allowed to buy the sovereign debt of eurozone countries that are having difficulties raising money on capital markets as a way of supporting prices and lowering borrowing costs.

German sources did not, however, explicitly rule out the funds buying eurozone bonds directly – in other words, at the time they are issued.

Changes to the existing fund, the EFSF, and its successor, the ESM, are expected to be discussed by eurozone leaders when they meet in Brussels on Friday. They will discuss measures to ensure the stability of the eurozone, including a competitiveness pact that aims to strengthen economic co-ordination. The outlines of the pact are expected to be agreed tomorrow. But other issues, such as changes to the funds and modifications to the terms of the bail-outs for Ireland and Greece, are proving more difficult. These are not expected to be settled until a summit of EU leaders on 24-25 March.

Finance ministers from the 17 eurozone countries and the 27 EU member states are meeting in Brussels on 14-15 March to discuss measures for the eurozone. They are expected to schedule an extra meeting before the summit on 24-25 March to carry out technical work.

EU leaders are also meeting tomorrow morning to discuss the situation in Libya and north Africa. They will explore ways to help these countries make the transition to democracy including offering financial support for countries that hold free and fair elections.

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