French banks tapped the European Central Bank in December for a record €218.2 billion in loans, in a sign the sector piled in to the ECB's first offer of ultra-cheap three-year funds.

The Bank of France loaned the banking sector €218.2 billion in December, up from €166.6 billion in November, according to the French central bank's balance sheet.

The sum topped the previous record of €215.3 billion registered in December 2008 at the height of the 2008-2009 financial crisis, figures from Thomson Reuters Datastream showed.

The European Central Bank injected €489 billion of three-year liquidity into the banking system in December in order to fend off a credit crunch and keep loans flowing to the euro zone economy.

The Bank of France's lending to banks accounted for 25 per cent of total ECB lending to the banking sector in December, down from a record 26.6 per cent in October, according to data from Thomson Reuters Datastream.

Other data today showed Spanish lenders also borrowed record sums from the ECB in January.

The ECB will give banks a second chance to take extraordinary three-year loans on February 29th. A Reuters poll this week showed traders expect another bumper uptake of €400 billion.

Government bond yields in southern Europe have fallen sharply since the December offer of cheap liquidity, suggesting that banks have used the money to buy sovereign bonds.

French 10-year government bond yields have eased from slightly more than 3per cent in December to 2.95 per cent today even though credit rating agency Standard & Poor's stripped France of its AAA rating in the interval.

Reuters