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Euribor rates fall after soft economic data

FRANKFURT, Oct 2 (Reuters) - Key Euribor bank-to-bank lending rates fell on Tuesday after the latest economic data came in weak, increasing expectations that the European Central Bank could ease its policy later this year.

Data showed on Monday that manufacturing activity in the euro zone fell to levels not seen since early 2009 during the darkest days of the worst recession since World War II. The contraction suggested the 17-country euro zone could struggle to avoid falling back into recession.

While markets expect another rate cut this year, the ECB is expected to keep its main refinancing rate at a record low of 0.75 percent this week as it wants to keep some weapons in its arsenal.

The three-month Euribor rate

, traditionally the main gauge of unsecured bank-to-bank lending, fell to 0.220 percent from 0.223 percent.

Euribor rates have fallen by around 85 percent since late last year when the ECB started flooding money markets with cheap ultra long-term loans.

Six-month Euribor rates also fell, to 0.435 percent from 0.438 percent. One-week rates

ticked

down to 0.083 percent from 0.084 percent while Eonia overnight rates

fell to 0.095 percent from 0.107 percent.

Dollar-priced three-month bank-to-bank Euribor lending rates

decreased to 0.637 percent from 0.639 percent and overnight dollar rates fell to 0.318 percent from 0.322 percent.

The ECB's move to stop paying interest on banks' deposits has prompted banks to make stronger use of the current account facility, which still pays 0.75 percent interest for the required reserves.

A total of 295 billion euros was parked in the ECB's deposit facility overnight. Banks' current account deposits at the ECB rose to 534 billion euros.

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For a package of graphics on the ECB, click on:

For graphic of euro zone liquidity levels click:

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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 week 2 week 3 week 1 month 2 month 3 month 4 month 5 month 6 month 7 month 8 month 9 month 10 month 11 month 1 year

(Reporting by Frankfurt newsroom)

((frankfurt.newsroom@thomsonreuters.com)(+49 69 7565 1209))

Keywords: MARKETS EURIBOR/