Italy’s premier has called for an enlarged European bail-out fund to help stem the eurozone’s sovereign debt crisis, after an Italian government bond auction failed to raise the targeted amount despite unprecedented central bank action this month.

Mario Monti said yesterday that the European Financial Stability Facility needed to be “significantly bigger” and announced he would push European partners next month to commit greater resources to the bail-out vehicle.

The European Central Bank has resisted calls for it to intervene more actively by buying the debts of the eurozone periphery directly, but lent €489bn to European banks on December 31. This nurtured hopes that banks would relend some of these fresh funds to the continent’s embattled periphery.