Key Euribor rates inch lower under weight of ECB cash

Published 09/09/2010, 05:26 AM
Updated 09/09/2010, 05:32 AM

FRANKFURT, Sept 9 (Reuters) - Key euro interbank lending rates fell to six-week lows on Thursday, showing little sign of renewed worries that have hit the banking sector this week and held down by last week's commitment from the European Central Bank to continue pumping out unlimited cash into next year.

The three-month Euribor rate -- traditionally the main gauge of unsecured interbank euro lending and a mix of interest rate expectations and banks' appetite for lending -- dropped to 0.879 percent from 0.880 percent and the lowest since mid-July.

Shorter-term one-week rates fell to 0.502 percent from 0.505 percent, six-month rates remained at 1.334 percent, while longer term one-year rates bucked the trend rising to 1.415 percent to 1.412 percent.

Euribor 3-month rates have been drifting down since early August after ECB loan repayments and euro-zone sovereign debt fears earlier in the year had pushed them to year highs.

Overnight rates dropped to 0.423 percent from 0.695 percent on Wednesday, a move prompted by banks juggling funds at after the last day of the ECB's reserves maintenance period.

Despite the ECB's extension of unlimited funds until mid-January, outstanding ECB lending has fallen more than a third since the start of July to around 590 billion euros . Liquidity remains abundant though. Over 200 billion euros was deposited back at the ECB overnight via two separate operations on Tuesday. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

For graphic of EONIA trading volumes click http://graphics.thomsonreuters.com/F/08/EZ_EONIA0810.gif

For graphic of euro zone liquidity levels click http://graphics.thomsonreuters.com/F/08/EZ_ECBLQ0810.jpg ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Euribor rates are fixed daily by the Banking Federation of the European Union (FBE) shortly after 0900 GMT.

* For a table of the latest Euribor fixings for terms of one week to one year, double click on

* For a table of the previous day's fixings of EONIA swap rates, which show market expectations for future overnight lending rates, double click on

* For graphs of historic Euribor and EONIA swap rates, right click on the links in angle brackets below, and select 'Related Graph' 1 week 2 week 3 week 1 month 2 month 3 month 4 month 5 month 6 month 7 month 8 month 9 month 10 month 11 month 1 year (Reporting by Frankfurt newsroom)

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