MONEY MARKETS-Interbank dlr rates edge up on yr-end anxiety

* Dollar interbank rates stay high on year-end anxiety

* Central banks keep injecting liquidity

* Focus on central bank rate cuts

(Recasts with London interbank rates, changes byline, dateline (PVS Singapore)

By Emelia Sithole-Matarise

LONDON, Nov 28 (Reuters) - Interbank dollar funding rates edged up on Friday, revealing anxiety about cash supplies as banks prepare to close their books for the year-end even as many of them used government guarantees to issue debt.

Highlighting the worst was not yet over in money markets, European Central Bank President Jean-Claude Trichet said pumping in billions of euros and dollars into the system was still vital, and cutting back the amounts was still not an option.

The ECB is one of a string of central banks pumping in massive amounts of cash into markets to prevent banks from running out of money.

In Japan, the central bank carried out its biggest daily cash injection since lifting its quantitative easing policy two years ago as credit risks weighed.

Markets were also anticipating further interest rate cuts as central banks battle to shore up growth, with the ECB and the Bank of England monetary policy decisions due next Thursday. The U.S. Federal Reserve, which is getting close to the end of its easing cycle, is expected to cut again at its December meeting.

London interbank offered rates for three-month dollars rose to 2.21688 percent USD3MFSR= from 2.20250 percent on Thursday. Rates across the other maturities were also a touch higher.

The cost of borrowing three-month dollars, euros and sterling relative to expected central bank rates across all three currencies rose, most notably for sterling.

"I don't expect to see any magical reduction in Libor rates," said Padhraic Garvey, head of investment grade strategy at ING in Amsterdam.

"The Fed is probably going to cut again and I don't think Libor rates will match that cut. I think they will underperform that cut. We are still in as bad a situation now as we were a number of months ago," he said.

Spreads remained elevated despite evidence banks in Britain and in the United States were able to raise more funds under government guarantees.

JPMorgan Chase (JPM.N) sold $6 billion of FDIC-backed bonds, Morgan Stanley (MS.N) sold $5.25 billion and Goldman Sachs (GS.N) sold an inaugural $5 billion. [USC/]