Money-market rates in Europe fell on speculation the region's policy makers will join counterparts in Asia in slashing borrowing costs this week to loosen lending by banks and limit damage from a global recession.

The euro interbank offered rate, or Euribor, that banks charge one another for three-month loans dropped by 3 basis points to 4.73 percent yesterday, the 17th straight decline, the European Banking Federation said. Rates on comparable dollar loans were quoted as low as 2.85 percent as of 8:20 am in London, according to Jan Misch, a trader at Landesbank Baden-Wuerttemberg, Germany's biggest state-owned bank. That compares with the London interbank offered rate, or Libor, for such loans of 3.03 percent on Oct 31.

"Interest-rate cuts will help," said Misch. "The most important factor is that we haven't had bad news in terms of corporate or bank trouble for a few days. My view is that sentiment in the money market will improve further this week."