The key Euribor bank-to-bank lending rate ticked up on Friday after recent economic data suggested the euro zone economy could be turning a corner, easing pressure on the European Central Bank to further loosen monetary policy. French consumer confidence rose to a three month high in July, data showed on Friday.
Earlier in the week, Markit's flash Eurozone Composite purchasing managers' index jumped to an 18-month high in July and German business morale also rose slightly more than expected. The bounce supported the interbank rates, which had already been trending higher since Bundesbank chief Jens Weidmann said on July 11 the ECB had not "tied itself to the mast" with its forward guidance on low interest rates.
On Friday, the three-month Euribor rate, traditionally the main gauge of unsecured bank-to-bank lending, rose to 0.226 percent from 0.225 percent. The six-month rate ticked down to 0.343 percent from 0.344 percent while the one-week rate rose to 0.109 percent from 0.108 percent. The overnight Eonia rate decreased to 0.098 percent from 0.104 percent. Dollar-priced bank-to-bank Euribor lending rates were lower, with three-month rates falling to 0.48833 percent from 0.49000 percent and one-week rates down to 0.30167 from 0.30333 percent. Excess liquidity in the euro zone banking sector fell to 230 billion euros, but is still high enough to keep market rates below the ECB's refinancing rate.
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