FRANKFURT Euribor bank-to-bank lending rates fell on Thursday after weak economic indicators dealt a blow to euro zone economic recovery hopes and increased the chance of a policy rate cut by the European Central Bank.
A recent rise in the euro foreign exchange rate has fuelled market expectations that the ECB could react by cutting interest rates further or deploying other forms of policy easing.
Hopes the euro zone might emerge from recession soon were also dealt a blow on Thursday, as surveys showed the downturn in the region's businesses worsened unexpectedly this month - especially in France.
However, comments by Bank of France Governor Christian Noyer on Tuesday that "there is no particular interest in cutting rates by a few cents if it only impacts Germany or core countries" tempered expectations of a rate cut.
ECB President Mario Draghi stressed on Monday that the central bank's top priority is to enhance its transmission across the euro zone.
The ECB's main refinancing rate is already at a record-low level of 0.75 percent.
On Thursday, three-month Euribor rates, traditionally the main gauge of unsecured bank-to-bank lending, inched down to 0.220 percent from 0.221 percent.
The six-month rate fell to 0.354 percent from 0.356 percent and the one-week rate ticked down to 0.080 percent from 0.081 percent. The overnight Eonia rate rose on Wednesday to 0.069 percent from 0.062 percent.
Dollar-priced bank-to-bank Euribor lending rates were lower, with three-month rates falling to 0.48364 percent from 0.48455 percent and one-week rates to 0.32364 percent from 0.32455 percent.
(Reporting by Frankfurt newsroom)