The cost for European banks to borrow in dollars declined for the third day to the lowest in more than a week, according to a money-market indicator. The three-month cross-currency basis swap, the rate banks pay to convert euro interest payments into dollars, was 46 basis points below the euro interbank offered rate at 8:15 a.m. in London, the cheapest since May 11, from minus 47 yesterday. The measure was minus 41.5 basis points on May 4, which was the least expensive level since July. The one-year basis swap was little changed at 66 basis points below Euribor. A basis point is 0.01 percentage point. Prices in the forward market for three-month Euribor relative to overnight indexed swaps -- known as the FRA/OIS spread -- were little changed at 35 basis points, the lowest since May 10. A decline signals banks are more willing to lend. The Euribor/OIS spread held at 38 basis points for the 14th day. Lenders cut overnight deposits at the Frankfurt-based European Central Bank yesterday, placing 764 billion euros ($968 billion) from 768 billion euros the day before. To contact the reporter on this story: Katie Linsell in London at klinsell@bloomberg.net To contact the editor responsible for this story: Paul Armstrong at parmstrong10@bloomberg.net

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