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LONDON, Dec 8 (Reuters) - Short-dated German government bond yields gave up early falls on Thursday after the ECB unveiled measures to avert a freeze in short-term funding markets.
The ECB's quantitative easing scheme of more than a trillion euros ($1.06 trillion) of government bonds has made it hard for investment funds to source high-quality collateral to use for borrowing in so called repurchase-agreements, or repos.
But on Thursday, ECB chief Mario Draghi said the central bank had decided that it would start to accept cash as collateral for bonds that it lends back out to markets via its securities lending programme, for up to 50 billion euros.
"They have, to a limited degree, with these measures introduced a pressure release valve for repo markets," Mizuho strategist Peter Chatwell said.
Germany's two-year Schatz yield gave up early falls to trade flat at minus 0.68 percent. The yield earlier hit minus 0.76 percent, within a whisker of a record low, after the ECB lowered the yield limit on its bond-buying scheme. (Reporting by Dhara Ranasinghe; Editing by John Geddie)