January 6, 2014 / 10:27 AM / 4 years ago

Euribor rates steady as money market tension eases

FRANKFURT, Jan 6 (Reuters) - The key euro-priced
bank-to-bank lending rate paused on Monday after falling for
five sessions in a row as tension eases in money markets after
building up towards the end of last year. 
    Eonia, an average of interest rates at which euro
zone banks lend to each other overnight, surged to a two-year
high of 0.446 percent at the end of 2013 as thin liquidity
forced banks to overpay for cash, before falling back to 0.152
percent when markets returned to normal.
    Banks stocked up on liquidity to ward off the market tension
toward the end of the year, taking more than expected from the
European Central Bank at its extended weekly refinancing
operation last week. 
    The ECB made efforts to avoid any liquidity squeeze and
suspended repayments of its long-term refinancing operations
until Jan. 15.
    The central bank is set to meet in Thursday to discuss
monetary policy for the 18 countries that use the euro as their
currency, but economists do not expect any change yet.
    "While the EONIA rate exhibited its usual end of year spike,
with liquidity conditions simultaneously tightening owing to the
larger LTRO paybacks before Christmas, we would expect the ECB
to wait until the year-end disturbances have fully passed before
thinking about taking action in the money market," Goldman Sachs
wrote in a note.  
    Excess liquidity - the amount of money in the
market beyond which banks need for their day-to-day operations -
stood at 284 billion euros, having fallen to about 150 billion
towards in December.
    On Monday, the three-month Euribor rate,
traditionally the main gauge of unsecured bank-to-bank lending,
remained unchanged at 0.280 percent.
    The six-month Euribor rate eased to 0.380
percent from 0.381 percent, and the shorter-term one-week rate
 dropped to 0.169 percent from 0.177 percent.
Overnight Eonia fell to 0.111 percent on Friday from
0.152 percent in the previous session.
    Euribor rates are fixed daily by the Banking Federation of 
the European Union (FBE) shortly after 1000 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
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 (Reporting by Frankfurt newsroom)

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