European Central Bank head Mario Draghi said the eurozone' economy is still fragile and the bank is willing to use "all available instruments" to keep market interest rates from rising and hurting a fledgling recovery.

He said the bank will "exclude no option," including making a third round of cheap, long-term loans to banks. The loans would boost the flow of credit in the economy, helping growth.

"We view this recovery as weak, as fragile, as uneven," Draghi said at a news conference.

The euro rose after the comment, trading 0.6 per cent higher at $1.36 US, nearing a one-year high.

Yet the ECB took no action Wednesday. Draghi spoke after the bank left its benchmark interest rate unchanged at a record low 0.5 per cent.

Long-term financing an option

The U.S. Federal Reserve is considering scaling back its effort to keep bond market rates down. That has led to concerns market rates might rise in Europe as well. Europe's economy has just begun a recovery and still needs the support of low borrowing costs.

The 17-member currency union grew a modest 0.3 per cent in the second quarter after six quarters of recession.

"We are ready to use all available instruments, including another LTRO (long-term refinancing options)," Draghi said.

The ECB has done two such operations in 2011 and 2012, handing out just over 1 trillion euros ($1.4 trillion Cdn)  in cheap, three-year loans to banks. That helped steady the banking system during the worse days of Europe's debt crisis.

So far, the Fed has postponed its decision to reduce its monetary stimulus program. That delay has helped keep market rates from rising further and given the ECB some breathing room. Draghi's comments about a possible credit offering have also helped push down money market rates.

Key rates to stay low

Besides hinting that the ECB could offer another round of cheap loans, Draghi held the door open to another interest rate cut if it's needed. He repeated the bank's stance that the ECB's key rates will stay at their current level or lower "for an extended period" until the economy improves.

Inflation is weak at an annual 1.1 per cent, giving the ECB room to add more stimulus. Lower rates and more credit can push inflation up, but weak growth has kept price increases down. The ECB's inflation goal is just under two per cent.

The bank is headquartered in Frankfurt but held its meeting at the Bank of France in Paris. It regularly meets in other eurozone countries to underscore its role as the monetary authority for the entire currency union and its 331 million people.