March 19 (Bloomberg) -- The cost of borrowing in dollars, euros and pounds rose, in a sign that the Federal Reserve is failing to instill confidence in money markets.

The London interbank offered rate, or Libor, for three-month loans in dollars rose 6 basis points to 2.60 percent today, the first increase since Feb. 26, the British Bankers' Association said. The euro rate climbed 1 basis point to 4.67 percent, while the pound rate also added 1 basis point to 5.98 percent, both the highest this year.

Money-market rates are rising as banks hoard cash on speculation financial institutions will reveal more losses. Bear Stearns Cos. had to be rescued by JPMorgan Chase & Co. this week after a run on the bank. HBOS Plc, Britain's biggest mortgage lender, said today it has ``ready access'' to funding after the company plunged as much as 17 percent.

``The market is concerned about another Bear Stearns-type event unfolding in Europe,'' said Richard Bryant, a bond trader at Citigroup Global Markets Inc. in New York. People are ``on edge yet again,'' he said.

The difference between the rate banks charge for three-month dollar loans relative to the overnight indexed swap rate showed a decline in the availability of cash. The so-called Libor-OIS spread widened 6 basis points to 63 basis points. It averaged 10 basis points in the first half of 2007.

Fed Falls Short

U.S. policy makers yesterday lowered their benchmark rate by 0.75 percentage point to 2.25 percent, falling short of traders' bets for at least a full percentage point cut. The Federal Open Market Committee, in its announcement, left the door open for further reductions.

After the Fed cut interest rates on Jan. 30, three-month dollar Libor fell 12.75 basis points.

The difference between what the U.S. government and banks pay to borrow for three months, another gauge of the availability of funds, also rose today. The TED spread jumped to 188 basis points, the highest since Dec. 21, from 166 basis points yesterday. The spread averaged 38 basis points in the first half of last year.

Credit-default swaps on Edinburgh-based HBOS rose 19 basis points to 270, according to CMA Datavision.. The securities, used to speculate on a company's ability to repay debt, rise as credit quality worsens. A basis point is 0.01 percentage point.

To contact the reporter on this story: Gavin Finch in London at gfinch@bloomberg.net

Last Updated: March 19, 2008 10:31 EDT