* Govt bond purchases of 13 bln euros highest since Oct 2017
* Data does not reflect new emergency programme (Writes through)
FRANKFURT, March 23 (Reuters) - The European Central Bank bought the most government debt in 2-1/2 years last week, helping fuel a rebound in bonds issued by Italy and other coronavirus-stricken countries struggling on the funding market.
The volume was disclosed in the first release of data since the ECB increased its bond purchases for this year by 120 billion euros on March 12 to stem the economic and financial fallout of the pandemic.
After an initial faux pas by President Christine Lagarde, the ECB pledged to step in to ensure that all countries benefitted from its ultra-easy monetary policy, countering selloffs on the bond market when needed.
The data showed the ECB bought 13.029 billion euros worth of public-sector bonds in the five days to March 20, the largest amount since early October 2017.
Italian, Spanish and Portuguese government bonds rebounded last week and the spread between their yields and Germany’s narrowed.
The ECB only provides a country breakdown at the end of each month but a source told Reuters last week the Bank of Italy, which carries out Italian purchases on behalf of the ECB, was hoovering up local paper to ensure orderly conditions on the market.
The latest data did not capture the bulk of the ECB’s crisis-fighting effort - a new scheme worth 750 billion euro and launched last week under the name Pandemic Emergency Purchase Programme.
This initiative was announced late on Wednesday, meaning any purchase carried out on Thursday wouldn’t have settled by Friday. (Reporting By Francesco Canepa and Balazs Koranyi, Editing by William Maclean)