Key Euribor rate dips after banks stock up on cash

Thu Jan 30, 2014 5:26am EST

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FRANKFURT, Jan 30 (Reuters) - The key euro-priced
bank-to-bank lending rate inched down on Thursday as banks kept
up the amount of money they hold beyond what they need for their
day-to-day operations, easing upward pressure short-term market
rates. 
    Recent spikes in overnight lending rates had put pressure on
the ECB to step in and curb the rise, which if it happens too
quickly could even derail the recovery.
    But the amount of money sloshing around the euro zone's
money markets is expected to remain at a high enough level over
the next week to keep short-term interest rates at current
levels. 
    On Wednesday, banks took 3 billion euros more from the ECB
in 3-month loans than what matured, which will increase excess
liquidity further.
    Banks' demand at the European Central Bank's weekly
refinancing stayed roughly unchanged, but they held back at the
central bank's weekly withdrawal of funds it spent on its first
government bond purchase programme.
    The result was that the ECB's liquidity provisions remains 
broadly unchanged, with excess liquidity at 165
billion euros on Thursday. 
    The three-month Euribor rate, traditionally
the main gauge of unsecured bank-to-bank lending, fell to 0.298
percent from 0.300 percent.
    The six-month Euribor rate eased to 0.399
percent from 0.402 percent and the shorter-term one-week rate
 fell to 0.191 percent from 0.207 percent.
    The EONIA overnight lending rate fell further to
0.157 percent from 0.179 percent.
    
    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'  
    1 week       
    2 week       
    1 month      
    2 month      
    3 month      
    6 month      
    9 month      
    1 year       
($1 = 0.7319 euros)

 (Reporting by Frankfurt newsroom)
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