FRANKFURT, Sept 26: The European Central Bank said on Friday it saw less demand for $30 billion (20.5 billion euros) offered in 3-day funds to eurozone banks.

The money was awarded to the banks at 2.25 per cent, an ECB statement said, with 33 groups requesting a total of $41 billion do.

On Thursday, a one-day offer of $40 billion was met with requests for a total of $72 billion, with the rate at 2.55 per cent for the cash.

Earlier Friday, the ECB announced it would extend currency swap agreements with the US Federal Reserve that allowed it to make one-week funds available in a bid to calm money market tensions as the banks closed their third-quarter accounts.

Commercial banks usually lend and borrow cash on interbank money markets but these have come under severe pressure since the US market for high-risk, or subprime, mortgages collapsed more than a year ago.

The ECB and the US Federal Reserve have established a currency swap so eurozone banks can borrow dollars directly from their central bank as markets worldwide are rocked by ongoing turmoil in the US financial sector.

Major central banks agreed last week to inject hundreds of billions of dollars into money markets that have been battered by the chronic crisis.

Since September 18, the ECB’s dollar tenders have generally met with strong demand from financial institutions which need the cash to continue providing the credit on which business depends.---AFP