THE EUROPEAN Central Bank could clash over strategy with the US Federal Reserve this week as a sharp fall in banks' demand for its liquidity and evidence that the euro zone's recovery remains on track strengthen the case for unwinding exceptional economic stimulus measures.

Amid talk in the US and UK of further "quantitative easing" to boost the economy, a harder tone from the ECB would risk sending the euro higher, hitting the region's exports. Euro zone economic news has been dominated recently by the costs of rescuing Ireland's banking system and Portugal's struggle to bring its public finances back under control.

Less noticed was a sign of confidence returning elsewhere in the euro zone. The region's banks rolled over just €133 billion out of €225 billion in three-month to 12-month ECB loans that expired last Thursday. - Copyright The Financial Times Limited 2010