Libor causes jitters as it continues its steady rise

INTERBANK lending hit another 10 month high yesterday, with concerns over sovereign debt showing no sign of abating.

The rate that banks charge each other for short-term loans in dollars – known as the London interbank offered rate, or Libor – edged to 0.54 per cent, up from 0.5 per cent on Monday, according to the British Bankers’ Association.

The upward trend began in the Spring after Libor had calmed since the depths of the recession. Rising Libor spooks investors, who saw a similar spike before Lehman collapsed.