June 2 (Bloomberg) -- The rate banks say they pay for three-month loans in dollars rose for the first time in three days as risk aversion in the wake of Greece's debt crisis heightened institutions' reluctance to lend to one another. The London interbank offered rate, or Libor, for such loans rose to 0.5375 percent today from 0.53625 percent yesterday, according to data from the British Bankers' Association. It reached 0.53844 percent on May 27, the highest level since July 6, amid speculation banks owned too many bonds from Europe's most indebted nations. "Today's increase is marginal, although the ultimate trend is still higher," said Marc Ostwald, a fixed-income strategist at Monument Securities Ltd. in London. Libor has more than doubled this year as the European sovereign-debt crisis raised concern that bank creditworthiness was worsening, making financial firms less willing to provide funding to potentially risky counterparties. The European Central Bank said two days ago that banks will have to write off more loans this year than in 2009 and their ability to sell bonds may be hampered as governments seek to finance fiscal deficits. To be sure, Libor's gains may also be due to prospects for an economic recovery, which may prompt policymakers to raise interest rates and withdraw emergency stimulus, according to Robert Crossley, a strategist at Citigroup Inc. 'Structural Repricing' "The recent spike in dollar Libor rates is a structural repricing rather than an indication of imminent disaster," Crossley, a fixed-income strategist at Citigroup in London, wrote in an e-mailed report today. "Libor does not look too high around 0.55 percent. Rather, nominal and real yields now look too low against a backdrop of the slow but steady recovery." The dollar Libor-OIS spread, a gauge of banks' reluctance to lend, was little changed at 31.1 basis points today. That compares with an average of about nine basis points in the first three months of the year. The spread surged to 364 basis points, or 3.64 percentage points, after the collapse of Lehman Brothers Holdings Inc. in September 2008. Three-month Libor is a benchmark for about $360 trillion of financial products worldwide, ranging from mortgages to student loans. Rates are determined by groups of banks in a daily survey by the BBA before 11 a.m. in London. Members provide estimates on how much it would cost to borrow in 10 currencies for periods ranging from a day to a year. Royal Bank of Scotland Group Plc contributed the highest dollar rate today, at 0.60 percent. Rabobank Groep gave the lowest, at 0.49 percent. The BBA strips out the four highest and lowest rates received, calculating the average of the middle eight. The three-month rate for euros, or euro Libor, rose to 0.638 percent today, from 0.637 percent yesterday. The three- month euro interbank offered rate, or Euribor, rose to 0.704 percent from 0.702 percent yesterday, according to the European Banking Federation. That's the highest level since Dec. 29.

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