The rates banks charge each other for borrowing dollar, euro and sterling funds continued to decline on Tuesday, but worries about year-end funding strains persisted. Those spreads are seen as a gauge of banks' willingness to lend to each other. The dollar spread narrowed just 2 basis points to 189 basis points. The European Central Bank is providing banks with unlimited liquidity for up to six months at fixed interest rates and has slashed rates by a total of 175 basis points to 2.5 percent since October. Moves by governments to provide guarantees for bank bonds have further helped ease funding stress in the interbank market. "We've gone past the crisis point for most of the interbank market. It's gradually improving in the last few weeks and we haven't had any really bad news apart from economic stuff," said David Keeble, global head of interest rate strategy at Calyon in London. Banks however remain reluctant to lend to each other amid lingering concerns about counterparty risks and in the lead up to the year-end period, where they tend to hoard cash to boost their books.