MONEY MARKETS-Dollar Libor hits 7-year high ahead of Yellen

NEW YORK, Aug 26 (Reuters) - A gauge on what banks charge each other to borrow dollars for three months rose on Friday to its highest level in more than seven years, ahead of a highly anticipated speech from Federal Reserve Chair Janet Yellen.

Yellen is scheduled to deliver a speech on monetary policy at 10 a.m. (1400 GMT) at a meeting of central bankers from around the world in Jackson Hole, Wyoming.

Traders and investors await possible clues from Yellen on whether the Fed may raise interest rates by the end of the year in the face of a soft global economy and low domestic inflation.

The London interbank offered rate on three-month dollars , a benchmark for more than $300 trillion worth of financial products worldwide, rose to 0.83344 percent from 0.82933 percent on Thursday.

On the week, three-month Libor was up 1.633 basis points.

Libor has risen more than 30 percent since late June as U.S. money market funds have scaled back their holdings of short-term bank debt in advance of new regulations. On Oct 14, government-only money funds will become exempt from rules on share value and fees from the U.S. Securities and Exchange Commission.

Since July, some U.S. prime money market funds, which had been major holders of commercial paper and other bank debt, have changed over to funds that hold only government securities.

Three-month Libor’s premium versus the three-month overnight indexed rate, which measures traders’ expectations on bank borrowing cost in three months, eased from its widest level since early 2012 set on Aug. 12, according to Reuters data.

This spread between three-month Libor and three-month OIS was last at 0.391 percent, compared with 0.400 percent on Thursday and its recent wide of 0.417 percent earlier this month.

Meanwhile, Libor for other maturities were broadly higher, reaching levels not seen in more than seven years.

One-month Libor rose to 0.52439 percent, matching the highest level since March 2009 set on Tuesday.

Six-month Libor increased to 1.23150 percent, its highest since June 2009.

One-year Libor rose for the first time in four days to 1.53656 percent. which was its highest since July 2009.

Reporting by Richard Leong