A legal opinion issued Wednesday by an adviser to the European Union's top court helps clear the way for bigger stimulus measures from the European Central Bank, analysts said.
 
The opinion from Pedro Cruz Villalon, an advocate general with the European Court of Justice, said that the ECB's offer in 2012 to buy government bonds of troubled countries was legal in principle.

He said the ECB would have to explain the reasons why an emergency justified the purchases, and must let markets set bond prices first before it purchases them. Otherwise, he affirmed the ECB's right to set monetary policy with limited scrutiny from judges.

Markets have been watching the case to learn whether the court might impose restrictions that could affect the ECB's plans for a new, larger stimulus program also based on purchases of government bonds. Investors think the central bank may announce such large-scale purchases of government bonds at its Jan. 22 meeting. The new program would aim to foster growth and nudge up inflation.

Jonathan Loynes, chief European economist at Capital Economics in London, said Wednesday's court decision "would seem to clear the path" for a bigger program of bond-buying next week.