LONDON - INTEREST rates on three-month dollar loans between banks fell for the third day running on Thursday, while the equivalent European rates also fell ahead of the rate cuts from the European Central Bank and the Bank of England.

The rate on three-month loans in dollars - known as the London Interbank Offered Rate, or Libor - inched down by nearly 0.01 percentage point to 2.19 per cent, according to the British Bankers' Association.

Meanwhile, the rate for three-month loans in euros - known as the European Interbank Offered Rate, or Euribor - decreased around 0.07 percentage points to 3.68 per cent, its lowest level since January 2007. The equivalent rate for pounds fell to 3.72 per cent from 3.79 per cent on Tuesday.

Interbank rates are important because they affect the cost of loans in the wider economy, for both businesses and individuals.

Rates have been high in recent months as banks have hoarded cash and worried that other lenders might collapse and not pay them back. -- AP