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Banks curtail repayment of old loans to ECB

FRANKFURT (Reuters) - Banks curbed their repayment of old loans given to them by the European Central Bank on Friday, a week after many took fresh long-term credit at almost zero cost.

The ECB said that seven banks would repay 4.589 billion euros (4 billion pounds) from a first round of emergency loans given at the height of the financial crisis.

Ten banks would repay 2.482 billion euros from a second such offer, it said, taking the total repayment to 7.071 billion euros.

A Reuters poll had pointed to a total repayment next week of 11.5 billion euros.

The announced repayment total is significantly lower than one week ago when banks repaid almost 40 billion euros.

The repayment of old loans runs counter to the ECB's efforts to expand its balance sheet by around 1 trillion euros - a target it has set with a view to pumping money into the flagging euro zone economy to foster lending and stimulate activity.

Last Thursday, the ECB's second offering of a new round of cheap loans to banks drew only tepid interest, underlining fragile confidence in the euro zone economy and making ECB money-printing to buy sovereign bonds appear all but inevitable.

(Reporting by Paul Carrel; Editing by Maria Sheahan)