* Deferred rates futures hit lowest levels in 2-1/2 months * Traders price in slim chances of rate hike in 2013 2nd qtr * Overnight repo, fed funds rates remain elevated By Richard Leong NEW YORK, March 14 (Reuters) - U.S. short-term interest rates futures fell for a second day on Wednesday as a more optimistic outlook from the Federal Reserve caused some traders to worry the U.S. central bank could raise rates earlier than they had previously thought. Much of the heavy selling in futures on interbank loan costs was for 2003 delivery and beyond, even though the Fed affirmed its pledge to hold short-term rates near zero until at least late 2014. These Eurodollar and federal funds contracts fell to their lowest levels in about 2-1/2 months. December 2014 Eurodollar futures are down 22.5 basis points since Monday's close and are on track for their biggest two-day day drop since last June. "There are some doubts on how long can the Fed keep short-term rates this low. Now it's not that far off to talk about a rate hike," said David Keeble, global head of interest rates strategy at Credit Agricole Corporate & Investment Bank in New York. Fed futures suggest traders are pricing in minute chances the Fed could raise rates in the second quarter of 2013, after the Fed in its policy statement on Tuesday said it sees "moderate" economic growth. A week ago, traders had priced in nil shot of a rate hike. At the same time, overnight costs to borrow dollars held at elevated levels. In the $1.6 trillion repurchase market, the interest rate for banks and Wall Street dealers to obtain overnight loans was quoted at 22 basis points, hovering at a six-week high. The cost for federal funds, which the Fed targets, was last bid at 12 basis points, flat from Tuesday and at its highest level in four weeks. Some analysts downplayed the Fed statement as the catalyst for the dramatic sell-off in the rates and bond markets in the past 24 hours. They blamed the drop in rates futures and elevated cash rates on the recent pickup in Treasury bill supply and improved risk appetite among investors after last Friday's relatively strong U.S. payrolls report. Investor sentiment also got a boost after the Fed decided to release the results of its latest bank stress test shortly after its policy statement, two days earlier than it had planned. The Fed said 15 of the 19 U.S. banks tested could withstand a financial shock that would see unemployment hit 13 percent and housing prices drop 21 percent. Investors welcomed the results as a sign of further recovery in a banking system that was pummeled by the housing meltdown and the ensuing global financial crisis. "We are on firmer footing. Look at the stress test results. They are central to the growth story," Keeble said.