Euribor rates keep rising as interbank tension grows

Key euro-priced bank-to-bank lending rates continued to rise on Friday, as tension in the money market and banks' reluctance to lend to each other grew due to the euro zone's intensifying debt crisis. Spiralling fears about the financial health of Greece and now also Italy and Spain have gradually frozen up interbank lending markets over the last fortnight.
Earlier in the week, demand for ECB funding had surged to a two-year high, underscoring the fact that the central bank is now the only liquidity option for many banks in the euro zone's trouble spots. A weak German debt auction on Wednesday also raised fears the crisis was starting to threaten even Berlin.
Three-month Euribor rates, traditionally the main gauge of unsecured interbank euro lending and a mix of interest rate expectations and banks' appetite for lending, continued an over a week-long climb, rising to 1.475 percent from 1.474 percent. Six-month rates edged up to 1.705 percent from 1.702 percent while 12-month rates were higher at 2.042 percent from 2.038 percent.
Shorter-term one-week rates - most heavily influenced by excess liquidity, which currently stands at a hefty 261 billion euros according to Reuters calculations - inched up to 0.911 percent from 0.909 percent. Overnight rates fell to 0.719 percent from 0.722 percent.