FRANKFURT: Euribor bank-to-bank lending rates dipped on Friday as weak economic data supported the view that the European Central Bank is ready to keep its policy loose for some time to come.
Markit's Eurozone Manufacturing Purchasing Managers' Index (PMI) showed on Friday that euro zone manufacturing activity appeared no closer to recovery last month, when a dire performance in France offset a return to growth in Germany.
Theis followed comments from ECB President Mario Draghi on Wednesday that he expects 2014 inflation to be "significantly" below 2 percent and added that the central bank was nowhere near exiting from crisis measures.
Banks also returned to the ECB less than expected of 3-year crisis loans on Wednesday, keeping the banking system awash with cash and excess liquidity high enough to keep downward pressure on market interest rates.
Three-month Euribor rates, traditionally the main gauge of unsecured bank-to-bank lending, dipped to 0.206 percent from 0.209 percent.
The six-month rate fell to 0.328 percent from 0.334 percent from, while the one-week rate held steady at 0.080 percent.
The overnight Eonia rate rose to 0.066 percent from 0.056 percent.
Dollar-priced bank-to-bank Euribor lending rates were mixed, with three-month rates rising to 0.50700 percent from 0.50222 and one-week rates easing to 0.31300 percent from 0.31333 percent.
Excess liquidity in the euro zone banking system has gone down to 403 billion euros, but remains high enough to keep market rates below the ECB's main refinancing rate, currently at a record-low level of 0.75 percent.
ECB President Mario Draghi said in February he does not expect market rates face upward pressure until excess liquidity falls below 200 billion euros.
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