FRANKFURT The key Euribor bank-to-bank lending rate steadied on Thursday, halting a two-day fall as surveys showed business activity across the euro zone picked up this month, easing pressure on the European Central Bank to ease policy further.
Survey compiler Markit's Flash Composite Purchasing Managers' Index (PMI) bounced to 51.7 from last month's 50.5. It was the highest reading since June 2011 and beat all predictions in a Reuters poll whose median forecast was for 50.9.
"After emerging from recession in Q2, growth is now accelerating markedly in the euro zone," Berenberg economist Christian Schulz said in a research note, adding he saw a rising chance of the ECB revising up its growth forecasts in September.
The ECB holds its next policy meeting on September 5.
Last month, the ECB said it would keep its interest rates at record lows for an "extended period" - its first use of forward guidance. But the stronger PMI eases pressure on the central bank to cut its main rate below 0.5 percent.
On Thursday, the three-month Euribor rate, traditionally the main gauge of unsecured bank-to-bank lending, held steady at 0.224 percent.
The six-month Euribor rate rose to 0.343 percent from 0.341 percent, while the one-week rate ticked up to 0.105 percent from 0.100 percent. The overnight Eonia rate was unchanged at 0.078 percent.
Dollar-priced bank-to-bank Euribor lending rates were firmer, with three-month rates rising to 0.50167 percent from 0.50000 percent and one-week rates up at 0.30667 percent from 0.30167 percent .
Excess liquidity in the euro zone banking sector stood at 256 billion euros, still high enough to keep short-term market rates below the ECB's refinancing rate.
The ECB said in its July monthly bulletin that as long as excess liquidity "remains above a certain threshold, estimated to be in the range of 100 billion to 200 billion euros, short-term money market rates are expected to stay slightly above the deposit rate".
A Reuters poll of traders showed on Monday they did not expect euro zone money market rates to rise significantly even if excess liquidity drops below the 200 billion euro level.
The ECB's main refi rate is at 0.5 percent and the deposit rate at zero.
(Reporting by Frankfurt newsroom; Editing by Catherine Evans)