By Gavin Finch and Candice Zachariahs Oct. 16 (Bloomberg) -- Money-market rates in Europe fell after central banks provided $254 billion of emergency cash to ease the paralysis in the credit markets and UBS AG got a $59 billion government bailout. The euro interbank offered rate, or Euribor, that banks charge each other for three-month loans declined for a fifth day, sliding 8 basis points to 5.09 percent, the European Banking Federation said. The London interbank offered rate, or Libor, for dollar loans will drop about 3 basis points to 4.52 percent, according to David Buik, a market analyst in London at interdealer broker BGC Partners Inc. Asian rates also dropped. ``Lending rates between banks are generally coming down, albeit slowly,'' said Su-Lin Ong, a senior economist at RBC Capital Markets Ltd. in Sydney. ``The system's been through incredible stress in the last month, so it's not going to snap in overnight.'' A thaw in money markets signals as much as $3 trillion of emergency funds provided by governments to tackle a collapse in trust between banks may be working. The three-month dollar rate dropped for a third day yesterday, its longest sequence of declines in seven weeks. Libor is used to determine rates on $360 trillion of financial products worldwide, from mortgages to company loans, according to the British Bankers' Association. Central banks are intensifying efforts to jolt credit markets back to life. The European Central Bank yesterday said it will accept lower-rated securities as collateral when lending to banks and offer them as many euros as they want over the next six months. The Bank of England will unveil plans to revamp its market operations at 11 a.m. in London. UBS Bailout ``Central banks are throwing everything they can at the credit markets to get them working again,'' said Win Thin, an economist at Brown Brothers Harriman & Co. UBS, Switzerland's biggest bank, will get a 6 billion Swiss franc ($5.2 billion) capital injection from the government to help it set up a fund for as much as $60 billion of toxic assets that will be supported by the central bank. The transaction will leave UBS with ``essentially zero'' risk related to U.S. subprime-mortgage-backed securities, Chief Executive Officer Marcel Rohner said. The ECB yesterday lent banks $170.9 billion for seven days at a fixed rate of 2.28 percent, 180 basis points less than the comparable Libor the day before. The Bank of England allotted $76.3 billion and the Swiss central bank loaned $7.1 billion at the same rate, also for a week. Euribor is set each day after a survey of more than 30 banks by the EBF. Libor is fixed about 90 minutes later by the BBA after banks provide estimates on how much it would cost to borrow in 10 currencies for terms between one day and a year. Asian rates fell after the Reserve Bank of Australia and Bank of Japan pumped $4.8 billion into markets. `Not Sufficient' The rate Australian banks charge each other for three-month loans fell to 5.695 percent, compared with 7.49 percent on Sept. 19, four days after Lehman Brothers Holdings Inc. collapsed. Japan's overnight call loan rate traded at 0.46 percent, from 0.53 percent before the cash injection, according to brokerage Tokyo Tanshi Co. The BOJ operations are ``necessary but not sufficient,'' said Guthrie Williamson, portfolio manager in Sydney at Principal Global Investors, which manages $244.9 billion in assets globally. ``It helps to keep the day-to-day money markets moving, but it doesn't change the fundamentals of slowing economic growth and balance sheet de-leveraging.'' Singapore's three-month interbank offered rate for U.S. dollars declined 3 basis points to 4.54 percent. Hong Kong's three-month interbank lending rate, or Hibor, rose 1 basis point to 4.35 percent, after declining the previous two days. To contact the reporters on this story: Gavin Finch in London at gfinch@bloomberg.net; Candice Zachariahs in Sydney at czachariahs2@bloomberg.net

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