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Bank injects £5Bn into markets
The Bank of England has pumped another £5 billion into money markets as it met the bosses of Britain's biggest banks.
The Bank doubled the weekly funding available to banks and lenders to £10.93 billion in the latest of a series of moves to avert a new devastating twist in the credit crunch.
The money auction, which followed a £5 billion cash injection on Monday, was nearly three times over-subscribed, suggesting banks were increasingly struggling to secure funding in wholesale markets.
And reports indicated that high street lenders would press the Bank's Governor, Mervyn King, for more funding in the scheduled meeting.
The Bank's "exceptional fine-tuning" operation on Monday - prompted by the crisis at US investment bank Bear Stearns - was also oversubscribed, almost five-fold.
The Bank said that it would keep re-offering the overnight money "for the remainder of the maintenance period".
Meanwhile, the Bank had already last week pledged a further £10 billion in extra cash to ease a surge in rates at which banks are prepared to lend to each other for three months.
The Bank said earlier this week that its efforts came in direct response to tightening conditions in money markets.
Rumours have been mounting over the funding position of major banks, with Halifax Bank of Scotland's shares hammered on Wednesday after becoming the victim of false market rumours, which sparked denials from bosses and the Bank of England.
It also emerged that Bath Building Society and Earl Shilton Building Society have withdrawn all of their home loans, except their standard variable rates, with Bath saying it had simply run out of money to lend.