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MONEY MARKETS-US repo rates tick lower, but near recent highs

* Benchmark euro interbank rates hit record lows

(Adds data on US repurchase rates) ADVISORY - Reuters plans to discontinue its daily report on the money markets in New York as of Oct. 15. Instead, we will include coverage of U.S. money markets in our daily reports on U.S. Treasury bonds. Significant developments in money markets will be reported separately by Reuters. For any comments, please write to: william.schomberg@thomsonreuters.com

NEW YORK, Oct 3 (Reuters) - U.S. overnight lending rates dipped on Wednesday, but remained near recent highs as investors looked ahead to key U.S. payrolls data due on Friday for direction as to the strength of the economic recovery.

The interest rate on overnight repurchase agreements

was last quoted at 0.32 percent, down from 0.35 percent late Tuesday. Repo rates have generally been rising since touching a low of 0.03 percent in July, 2011.

The median of forecasts from analysts polled by Reuters is for the government on Friday to announce U.S. employers added 113,000 new jobs in September, up from 96,000 new jobs in August. The unemployment rate is expected to have edged higher to 8.2 percent last month from 8.1 percent in August.

Meanwhile, key Euribor and Libor bank-to-bank rates hit fresh record lows on Wednesday, as the huge volume of cash pumped into the banking system by the European Central Bank and the prospect of further cuts in its interest rates extended a year-long slide.

The three-month Euribor rate

, traditionally the main gauge of unsecured bank-to-bank lending, fell to 0.218 percent from 0.220 percent. The equivalent Libor rate, settled in London at a record low of 0.14643 percent, versus Tuesday's 0.14857 percent

.

Shorter term one-week rates

ticked down to 0.082 percent after overnight Eonia rates also hit a record low of 0.087 percent.

Bank-to-bank lending rates have been in virtual free-fall since November last year when news broke that the ECB was going to flood the banking system with ultra-cheap, three-year cash.

The bank's decision in July to stop paying interest on overnight deposits has allowed the slide to continue by removing the natural 0.25 percent floor for the money market.

In contrast to euro rates, dollar-priced bank-to-bank Euribor lending rates

inched higher, with three-month rates up to 0.63769 percent from Tuesday's 0.63692 percent and overnight dollar rates edging up to 0.31846 percent from 0.31769 percent.

Three-month dollar Libor rates fixed at 0.35250 percent, down from 0.35400 percent on Tuesday.

The amount of excess cash in the euro zone banking system remains extremely high at 726 billion euros, according to Reuters calculations

.

With liquidity set to remain high for the foreseeable future money market experts are instead focused on whether the ECB could copy Denmark's example and start charging banks to deposit cash overnight with it.

It is an idea that has been floated by a number of ECB policymakers but it would be a complicated move and add extra complexity to an already dysfunctional money market.

Euribor rates are fixed daily by the Banking Federation of the European Union (FBE) shortly after 0900 GMT.

(Reporting by Chris Reese in New York and Marc Jones and Marius Zaharia in London; Editing by Leslie Gevirtz)

((chris.reese@thomsonreuters.com)(+1-646-223-6073, Reuters Messaging: chris.reese.reuters.com@reuters.net))

Keywords: MARKETS MONEY/