3-mth dlr interbank rate range narrows, TED spread falls

LONDON, Jan 7 (Reuters) - Interbank lending rates for
three-month dollar and sterling funds were indicated in a
narrower range on Wednesday, while the equivalent euro rate
range widened, Reuters data showed.

The so-called "TED spread" TEDCASH, the premium investors
pay for three-month interbank lending over comparable Treasury
bill yields and a closely watched measure of financial market
stress, narrowed to around 127 basis points.

On Tuesday intraday, the TED spread fell to 125 basis points
and Reuters charts show that was the narrowest since Sept. 12,
2008, just before official news about the collapse of Lehman
Brothers broke.

Three-month dollar rates USD3MD= were indicated between
1.27 and 1.51 percent compared with a range of between 1.19 and
1.57 percent on Tuesday.

Three-month euro deposit rates EUR3MD= were indicated
between 2.21 and 2.80 percent versus 2.60-2.81 percent and
three-month sterling deposit rates GBP3MD= were between 1.75
and 2.25 percent compared with 1.65-2.34 percent.

Interbank deposit rates are only indicative prices of where
banks are lending to each other, which institutions use as a
base to set their own lending rates.

The two-year U.S. interest rate swap spread was trading
around 70 basis points in early London trading, down from around
73 basis points the same time on Tuesday.
(Reporting by George Matlock)