Key Euribor rate dips after banks stock up on liquidity at year-end

Thu Jan 2, 2014 5:46am EST

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FRANKFURT, Jan 2 (Reuters) - The key euro-priced
bank-to-bank lending rate fell on Thursday as banks started the
new year with solid liquidity buffers, which they had
accumulated to ward off year-end market tension.
    Banks took 168.662 billion euros from the European Central
Bank at its extended weekly refinancing operation on Monday,
more than the 140 billion euros money market traders had
forecast in a Reuters poll. 
    They also returned less than the full value of the ECB's
former government bond purchase programme in the weekly
sterilisation round on Monday. 
    The ECB made efforts to avoid any liquidity squeeze towards
the end of the year and suspended repayments of its ultra-cheap
loan until Jan. 15.
    Excess liquidity - the amount of money in the market beyond
which banks need for their day-to-day operations - fell to 269
billion euros on Thursday from around 275 billion euros on
Tuesday. 
    That was down from over 600 billion euros at the start of
last year. 
    Concerns about the drop have supported Euribor rates since
mid-November, though a spike in excess liquidity to just above
200 billion euros immediately prior to Christmas and towards the
end of the year eased the upward pressure.
    On Thursday, the three-month Euribor rate,
traditionally the main gauge of unsecured bank-to-bank lending,
fell to 0.284 percent from 0.287 percent.
    The six-month Euribor rate eased to 0.387
percent from 0.389 percent, and the shorter-term one-week rate
 dropped to 0.183 percent from 0.188 percent.
Overnight Eonia jumped to 0.446 percent on Tuesday, the
last day of the year, from 0.223 percent previously.
    
    Euribor rates are fixed daily by the Banking Federation of 
the European Union (FBE) shortly after 1000 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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($1 = 0.7296 euros)

 (Reporting by Frankfurt newsroom; Editing by Susan Fenton)
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