REFILE-MONEY MARKETS-Dlr funding costs ease,spreads show stress

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* Bank-to-bank lending rates fall further in Europe

* Stresses stall narrowing in Libor spreads

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* Citigroup SIV buy highlights strain in banking system

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By Emelia Sithole-Matarise

LONDON, Nov 20 (Reuters) - Dollar bank-to-bank lending rates fell further in Europe on Thursday but the premium paid over expected central bank rates stayed high enough to reveal a growing fear of a deep global recession.

Three-month dollar London interbank offered rates edged down to 2.15313 percent <USD3MFSR=> from 2.17250 percent at Wednesday's fixing.

Yet, even as massive cash and capital injections by global central banks encouraged the drop in money market funding costs, the sense of gloom over economic growth and business profits was getting deeper and weighing on other credit spreads.

Global share markets skidded on Thursday after U.S. stocks .DJI fell to their lowest in 5-½ years the previous session on worries over bank giant Citigroup (C.N) and U.S. automakers.

Citigroup has been reeling on concerns that mounting losses from credit cards, mortgage and toxic debt could overwhelm the second-largest U.S. bank by assets.

The group agreed on Wednesday to buy $17.4 billion in assets remaining in some funds known as structured investment vehicles, underlining the stress on the banking system. The SIVs were among the earlier investments to implode when the global credit crunch began last year.

Financial markets were further rattled by the Swiss National Bank's surprise 100 basis point interest rate cut, joining central banks elsewhere who have cut rates sharply to boost their economies.

"I think it's going to be a very challenging environment all the way up to the first of December and I'd expect Libors not to come down too much and maybe spreads to widen again," said Kenneth Broux, financial market economist at Lloyds TSB in London.