Euro zone money market calms after ECB sets tender

FRANKFURT Aug 10 (Reuters) - Euro zone money markets calmed on Friday after the European Central Bank announced a quick tender to add liquidity to the market for the second day in a row, traders said.

"It's better after the ECB. Everything is fine now," said a euro zone trader.

The ECB said it was accepting bids of 4.00 percent and higher in a 3-day reverse transactions which provide liquidity to the market. The ECB injected a record 94.8 billion euros into markets on Thursday, which matures on Friday.

"The liquidity-providing fine-tuning operation follows up on the operation conducted yesterday and aims to assure orderly conditions in the euro money market," the ECB said.

After the announcement, Reuters data EURD= showed short-term borrowing costs easing to a 4.05-4.15 percent bid/ask spread, which broadly matched traders' experience.

Earlier it had been trading at 4.15-4.25 percent.

Nonetheless, Aurelio Maccario, co-head of European economics at UniCredit Global Research, said he would be keeping a close eye on how much banks bid for at the tender for a guide to market conditions.

"Any number above 95 billion is a signal that the market is panicking," he said.

The ECB pumped a record 94.8 billion euros into Europe's money markets on Thursday as banks scrambled for cash after France's biggest listed bank, BNP Paribas (BNPP.PA), froze withdrawals from three funds.

Traders said Friday's ECB announcement had also brought some relief to the tight U.S. dollar deposit market.

"Even as we speak it's coming down a bit. Levels of 6 percent are not very realistic," said another trader.

The Bundesbank said German banks accounted for about 50 percent of bids in Thursday's tender, in line with the long-run average. (Additional reporting by Krista Hughes)