Euribor rates steady, borrowing from ECB highest since March

Key euro-priced bank-to-bank lending rates steadied on Friday as tensions on the interbank market, highlighted by a jump in borrowing from the ECB, offset Wednesday's joint central bank liquidity operation and expectations of an interest rate cut. Overnight borrowing from the ECB jumped to its highest since March, rising to 8.64 billion euros from 4.638 billion a day earlier.
The jump in borrowing highlighted the freeze in traditional interbank lending markets, which have tightened up over fears about the euro zone debt crisis, forcing banks to make greater use of the ECB's limit-free loans. To try to prevent the spread of broader bank-funding problems, top central banks around the world, including the ECB, announced steps to lower the cost of borrow dollars on Wednesday. The dollar operation, together with an increase in excess liquidity, cancelled out the upward pressure from market tensions on interbank rates.
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 held steady at 1.469 percent. Six-month rates edged up to 1.699 percent from 1.697 percent while 12-month rates ticked up to 2.033 percent from 2.030 percent. Shorter-term one-week rates - most heavily influenced by excess liquidity, now at a post-June 2010 high of 314 billion euros according to Reuters calculations - dipped to 0.892 percent from 0.894 percent. Overnight rates eased to 0.736 percent from 0.805 percent.