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Three-Month Money Markets Rates Rise Again

The interbank cost of borrowing three-month dollar, sterling and euro funds rose on Tuesday, according to the British Bankers Association's latest daily fixing, despite central banks continuing to pump funds into the money market.

London interbank offered rates for three-month sterling funds rose for the 11th session in a row to 5.99500 percent, the highest since late December, from 5.98750 percent as markets trimmed UK rate cut expectations after surprisingly strong retail sales figures last week.

Three-month euro Libor rates rose to 4.70375 percent from 4.68 percent on Thursday, again their highest level so far this year, while three-month dollar funds rose to 2.65500 from 2.60625 percent.

Euro zone interest rate futures fell sharply on Tuesday and are no longer fully indicating an easing in European Central Bank rates this year.

Optimism over Federal Reserve-led action in recent weeks to ease financial market liquidity strains, hope the U.S. mortgage market malaise may be nearing an end and JPMorgan Chase's increased bid for Bear Stearns have combined to boost global stocks, bond yields and short-term interest rates.

But interbank lending rates remain elevated.

Three-month Euribor rose to a fresh three-month high of 4.699 percent from 4.674 percent last Thursday, while one-week Euribor rates fixed at 4.315 percent from 4.279 percent, also the highest since late December.

Ahead of the Easter holidays, the ECB injected 15 billion euros of short-term funds into the market while the Bank of England pumped in an extra 5 billion pounds in weekly loans but some analysts said it was not enough to ease tensions in fragile money markets.