Key 3-month bank-to-bank lending rates are closing in on the ECB's benchmark interest rate of 1 percent in anticipation that next Wednesday's second tranche of ECB funds will gush another half a trillion euros into the banking system. 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, fell on Wednesday to 1.021 percent from 1.026 percent, hitting the lowest level since January last year. Rates in other maturities also dropped. Six-month rates fell to 1.315 percent from 1.321 percent, while 1onger-term 12-month rates dropped to 1.648 percent from 1.652 percent. One-week rates, the most heavily influenced by excess liquidity which currently stands at a massive 456 billion euros according to Reuters calculations, fell to 0.362 percent from 0.364 percent. Overnight rates bucked the trend and inched up to 0.362 percent on Tuesday from 0.360 percent the previous day. Although they remain well above the low of 0.635 percent they hit in early 2010, 3-month lending rates have dropped by almost a third since the ECB announced plans to lend banks three-year money back in December. In anticipation for next week's ultra-long tender, banks have more than halved their intake of 1-month loans and instead increased their appetite for easy-to-juggle weekly funds, taking 166 billion euros on Tuesday, up from 143 billion a week earlier. Thanks to the first 489 billion euro cash-injection in December, banks have been able to stabilise their long-term funding and keep lending to companies and households, ECB Executive Board member Peter Praet said on Monday. The cash is also having a positive impact on both the money market and euro zone bond markets, such as Spain and Italy. Money market experts also report that some banks are now prepared to lend to some of their peers for as long as three months, a marked improvement on last month when even month-long loans were hard to come by in the open market. Despite the apparent success of the measure, the ECB wants its second 3-year tender to be the last as central bank sources say they are worried banks will become too reliant on the funds. With high amounts of excess liquidity in the system and the money market still dysfunctional, banks are depositing much of the extra cash back at the ECB. Overnight deposits at the ECB hit a record high of 528 billion euros at the beginning of the year and topped the half a trillion mark again last week at the peak of the ECB monthly reserves cycle. Short-term market rates are well below the bank's main 1 percent policy rate due to the excess cash. Its 0.25 percent overnight deposit rate is acting as a floor for money markets. Euribor rates are fixed daily by the Banking Federation of the European Union (FBE) shortly after 1000 GMT.