Euribor rates flat after bleak GDP data

Thu Feb 14, 2013 5:29am EST

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FRANKFURT, Feb 14 (Reuters) - Euribor bank-to-bank lending
rates held steady on Thursday, with markets trying to figure out
the European Central Bank's next move after data showed euro
zone economies shrank more than expected in the fourth quarter.
    ECB President Mario Draghi's comments on the currency last
week fed expectations its gains in recent months could open the
door to an interest rate cut or other form of policy easing. 
    After the bank kept rates on hold at 0.75 percent last
Thursday, Draghi said that "there were hints and discussions
about how to improve financial conditions".
    Europe's two largest economies, Germany and France, both
shrank markedly in the last three months of 2012, suggesting the
euro zone has slipped deeper into recession.
    The bleak figures, combined with a stronger euro, cast a
shadow over the recovery expected to begin later this year, and
markets are looking for clues as to whether the ECB could engage
in additional policy easing.
    Euribor rates have climbed since the ECB announced on Jan.
25 that banks would repay a larger-than-expected amount in
long-term loans - a move that has driven down excess liquidity
in the financial system to some 490 billion euros. 
    But the heavy oversupply of ECB cash has long depressed the
rates banks charge each other on lending markets, and Draghi
said that excess liquidity of more than 200 billion euros should
limit upward pressure on market rates.
    In total, the ECB pumped more than 1 trillion euros into the
banking system with two offerings of three-year loans roughly a
year ago as it tried to avert a credit crunch. 
    On Thursday, three-month Euribor rates,
traditionally the main gauge of unsecured bank-to-bank lending,
remained at 0.226 percent.
    The six-month rate eased to 0.367 percent from 0.369 percent
while the one-week rate was steady at 0.081
percent. The overnight Eonia rate fell to 0.064 percent
from 0.073 percent at the start of a new reserves maintenance
period.
    Dollar-priced bank-to-bank Euribor lending rates
  were lower, with three-month rates
falling to 0.48909 percent from 0.49000 percent and one-week
rates decreasing to 0.32091 percent from 0.32273 percent.
    
    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'  
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 (Reporting by Frankfurt newsroom; Editing by Ruth Pitchford)
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