FRANKFURT, June 5 (Reuters) - Euro zone bank-to-bank lending rates hit fresh two-year lows on Tuesday, weighed down by a growing belief the ECB will have to cut interest rates and keep its liquidity taps open to full to help shore up the euro zone's teetering economy and its banks.
The European Central Bank, which is under growing pressure to cut interest rates when it meets on Wednesday (for story click ), has helped halve interbank lending rates this year by providing banks with more than 1 trillion euros ($1.25 trillion) of ultra-cheap three-year funding.
Extending a near-vertical six-month drop, three-month Euribor rates, traditionally the main gauge of unsecured interbank euro lending, inched down to 0.663 percent from 0.664 percent.
Six-month Euribor rates also hit new two-year lows, dropping to 0.940 percent from 0.941 percent. One-year rates fell to 1.223 percent from 1.224 percent.
Shorter-term rates were more mixed. One week rates remained at 0.318 percent while overnight rates fixed at 0.332 percent on Monday, down from 0.337 percent.
Dollar-priced three-month bank-to-bank Euribor lending rates , were also steady, staying at 0.970 percent. Overnight rates dropped to 0.313 percent from 0.317 percent.
The sharp fall in euro-priced interbank rates over the last half a year has brought benchmark euro-priced three-month rates to within touching distance of the euro-era low of 0.634 percent hit in early 2010.
The 0.25 percent the ECB offers banks for overnight deposits continues to act as a floor for money market rates as banks know they can get that level of interest no matter what. Some analysts expect the ECB to cut the deposit rate as well later this year.
High excess liquidity in the banking system - now at 769 billion euros according to Reuters calculations - has led to heavy use of the ECB's overnight deposit facility, where banks parked 781 billion euros overnight. In normal times the amounts are minimal.
Euribor rates are fixed daily by the Banking Federation of the European Union (FBE) shortly after 0900 GMT.
* For a table of the latest Euribor fixings for terms of one week to one year, double click on
* For a table of the previous day's fixings of EONIA swap rates, which show market expectations for future overnight lending rates, double click on
* For graphs of historic Euribor and EONIA swap rates, right click on the links in angle brackets below, and select 'Related Graph'
1 year (Reporting by Frankfurt newsroom)