Key Euribor rate drops for first time since April

FRANKFURT, July 30 (Reuters) - Key euro interbank lending rates dropped for the first time since mid-April on Friday.

The three-month Euribor rate EURIBOR3MD= -- traditionally the main gauge of interbank euro lending and a mix of interest rate expectations and banks' appetite for lending -- fell to 0.896 percent from 0.899 percent the previous day, the first fall since April 19.

One-year rates EURIBOR1YD= fell to 1.417 percent from 1.419 percent, shorter-term one-week rates EURIBORSWD= dropped to 0.577 percent from 0.584 percent, while six-month rates EURIBOR6MD= remained at 1.145 percent.

Interbank rates have been on a upward run since April, when a combination of the euro zone debt crisis and the nearing payback of 442 billion euros of ECB one-year loans, brought an end to a 1-1/2 year decline which saw 3-month rates go as low as 0.634 percent.

ECB President Jean-Claude Trichet expressed little concern about the rise when asked about the trend earlier this month [ID:nLDE6670DA] and other ECB members have said it is part of the post-crisis normalisation process.

The rise has been sustained by a belief that remaining excess money market cash could almost disappear by the end of the year if the ECB continues to scale back its lending support.

That would create a situation where weaker banks have to go back to open markets that have refused them longer term funds during much of the financial and debt crises.

The key will be whether the ECB extends its current tactic of lending banks as much money as they want in three-month tenders beyond September, and in both one-week and one-month operations past the current promise of mid-October.

The decision is expected to be made at its September 2 policy meeting. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For graphic of euro zone liquidity levels click here ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

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 EURIBOR=

* 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 EONIAINDEX

* For graphs of historic Euribor and EONIA swap rates, right click on the links in angle brackets below, and select 'Related Graph' 1 week EURIBORSWD= EONIAINDEXSW= 2 week EURIBOR2WD= EONIAINDEX2W= 3 week EURIBOR3WD= EONIAINDEX3W= 1 month EURIBOR1MD= EONIAINDEX1M= 2 month EURIBOR2MD= EONIAINDEX2M= 3 month EURIBOR3MD= EONIAINDEX3M= 4 month EURIBOR4MD= EONIAINDEX4M= 5 month EURIBOR5MD= EONIAINDEX5M= 6 month EURIBOR6MD= EONIAINDEX6M= 7 month EURIBOR7MD= EONIAINDEX7M= 8 month EURIBORS8M= EONIAINDEX8M= 9 month EURIBOR9MD= EONIAINDEX9M= 10 month EURIBOR10MD= EONIAINDEX10M= 11 month EURIBOR11MD= EONIAINDEX11M= 1 year EURIBOR1YD= EONIAINDEX1Y= (Reporting by Frankfurt newsroom; Editing by Susan Fenton)