Bank of England injects funds as jitters persist

The Bank of England pumped an extra 5 billion pounds in weekly loans into the interbank market on Thursday but some analysts said it was not enough to ease tensions in fragile money markets.

The Bank said it would continue to offer the additional weekly funding until its policymakers decide whether to change key lending rates at their next monthly meeting on April 9-10.

"Given that overnight rates have generally remained above the Bank rate since Monday, the level of extra liquidity is a little disappointing," said Philip Shaw, chief economist at Investec.

Banks have been so fearful of each others' solvency they have been charging as much as 25 basis points above the main central bank lending rate for loans of even one day.

The Bank made an emergency offer of 5 billion pounds of three-day loans on Monday that was nearly five times oversubscribed as financial institutions scrambled for cash.

Thursday's operation, which allows banks who took up Monday's offer to roll over their borrowing, was about three times oversubscribed.

The Bank's decision to allow this additional funding to continue comes as turmoil in global credit markets once again grabs headlines this week.

Banking stocks came under renewed pressure on Thursday as a profit warning from Credit Suisse and a bearish forecast from Germany's Allianz kept credit market woes firmly in the spotlight.

Bank of England officials are due to meet representatives from major banks later in the day for a regular meeting to discuss financial stability.