Money markets us cp market expands in latest week

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NEW YORK, July 12 The U.S. commercial paper market expanded in the latest week, suggesting more corporate borrowing despite worries about a global economic slowdown, Federal Reserve data showed on Thursday. The size of the U.S. commercial paper market expanded by $9.4 billion to $981.9 billion in the week ended July 11 on a seasonally adjusted basis, according to the latest Fed data. The data shows there may have been increased risk taking after a large fall the previous week, when investors were expected to be reducing positions in order to tidy balance sheets for quarter end. The market had contracted by $35.7 billion the previous week. Outstanding volumes have largely stayed in the area between $900 billion to $1 trillion this year, and remain below year-end levels of $1.04 trillion at the end of 2010, the Fed data show.

The market size without seasonal adjustments also rose, by $24.4 billion to $995.6 billion in the latest week. Foreign banks' commercial paper outstanding increased $2.5 billion in the latest week to $130 billion on a non-seasonally adjusted basis, the latest Fed data showed.

BANKS SLASH ECB DEPOSITS In Europe Banks slashed the amount of money they parked at the ECB after it stopped paying interest on overnight deposits on Wednesday, but there was no sign they were using it to lend more or buy the bonds of crisis-hit euro zone states.

Banks are reluctant to lend to each other for fear of not getting all their money back, so they have deposited back with the ECB much of the cash from the central bank's 1 trillion euros cash boost in December and February. ECB policymaker Josef Bonnici said the plunge in overnight deposits - to 325 billion euros from more than 800 billion a day earlier - was "encouraging" and said he expected to see a rise in loans to firms and consumers as a result. But ECB President Mario Draghi has said he expects little impact on what banks and other investors do with their spare cash - a view reinforced by them simply moving funds from the deposit facility to their current accounts at the central bank."It's just a shifting of cash from one place to another and ultimately it's a zero-sum game," said Simon Peck, rate strategist at RBS.