Quo Vadis Dax 2011 - All Time High?

SEPTEMBER 27, 2011, 10:38 A.M. ET.

By MARGIT FEHER

FRANKFURT—Euro-zone banks' overnight deposits with the European Central Bank rose Monday to the highest amount since the Sept. 12 peak for this year.

Banks deposited €165.12 billion ($223.44 billion) with the ECB on Monday, the central bank said, up from €150.65 billion Friday, and the highest reading since this year's high of €197.75 billion on Sept. 12. Deposit levels have been rising steadily for the past five working days, a sign of persisting market uncertainty that has led banks to park their money with the ECB instead of lending to one another.

Close.Markets expect the ECB to reintroduce further long-term liquidity-providing measures and consider a rate cut, despite data which showed that euro-zone bank lending grew at a faster pace in August. Bank lending to the private sector rose 2.6% in August compared with the previous year, ECB figures showed Tuesday, after rising 2.4% in July.

"Despite the modest pickup in euro-zone money supply and loan growth in August, there remains a very strong case for the ECB to cut interest rates at their October policy meeting next Thursday," said Howard Archer, economist at Global Insight in London.

ECB governing council members, however, expressed conflicting views Monday about the interest-rate outlook for the ECB's next rate meeting on Oct. 6. Austrian central-bank governor Ewald Nowotny didn't rule out rate cuts, while central-bank governor Athanasios Orphanides of Cyprus said that current ECB policy remains appropriately accommodative and that policy rates are very low.