US sells 1-month bills at zero pct for 3rd week

NEW YORK, Dec 23 (Reuters) - The U.S. government sold four-week Treasury bills at zero percent for the third straight week on Tuesday, getting an interest-free loan from investors fretful over everything from deflation to the fragile banking system.

Fear of riskier assets amid the global credit crisis has driven an accelerating bid into the perceived safety of ultra-short-dated government instruments. Fund managers have scrambled to add more Treasury bills to portfolios ahead of year end.

Demand for the auction was extraordinarily high with a bid-to-cover ratio of 4.41, compared with 3.67 last week and 4.2 on Dec. 9, the first time bills were sold at no cost to the government. (Reporting by John Parry; Editing by Leslie Adler)