A gauge of overnight borrowing costs in euros fell to a negative level for the first time as the European Central Bank’s penalty charge on deposits damped money-market rates and yields in the region tumbled.

The euro overnight index average, or Eonia, fell to minus 0.004 percent, signaling banks would receive no interest for making the loans, compared with 0.011 percent yesterday.

Borrowing costs are tumbling after the ECB lowered its deposit rate to minus 0.1 percent on June 5 in an attempt to boost the flow of cash into the economy and stave off the threat of deflation.

Bonds surged across the region this week after ECB President Mario Draghi’s comments at the Federal Reserve Bank of Kansas City’s annual economic symposium in Jackson Hole, Wyoming, fueled speculation that officials may announce new stimulus as early as their Sept. 4 monetary-policy meeting.

German 10-year yields fell to a record 0.87 percent amid renewed tension between Ukraine and Russia. A report today showed euro-area economic confidence dropped more this month than economists estimated.