Euribor rates steady as money market tensions ease

Tue Jan 7, 2014 5:18am EST

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FRANKFURT, Jan 7 (Reuters) - The key euro-priced
bank-to-bank lending rate remained unchanged on Tuesday as
tension eases in money markets after building up towards the end
of last year.
    Eonia, an average of interest rates at which euro
zone banks lend to each other overnight, surged to a two-year
high of 0.446 percent at the end of 2013 as thin liquidity
forced banks to overpay for cash, before falling back as markets
returned to normal.
    Banks stocked up on liquidity to ward off the market tension
toward the end of the year, taking more than expected from the
European Central Bank at its extended weekly refinancing
operation last week. 
    The ECB made efforts to avoid any liquidity squeeze and
suspended repayments of its long-term refinancing operations
until Jan. 15.
    The central bank is set to meet on Thursday to discuss
monetary policy for the 18 countries that use the euro as their
currency, but economists do not expect any change yet.
    Excess liquidity - the amount of money in the
market beyond what banks need for their day-to-day operations -
stood at 277 billion euros, having fallen to about 150 billion
euros in December.
    On Tuesday, the three-month Euribor rate,
traditionally the main gauge of unsecured bank-to-bank lending,
remained at 0.280 percent.
    The six-month Euribor rate ticked up to 0.381
percent from 0.380 percent, while the shorter-term one-week rate
 decreased to 0.165 percent from 0.169 percent.
    Overnight Eonia fell to 0.096 percent on Monday
from 0.111 percent in the previous session.
    
    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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 (Reporting by Frankfurt newsroom; Editing by Catherine Evans)
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