The European Central Bank will allot 255 billion euros (220 billion pounds) at this week's seven-day refinancing operation and could offer long-term funding of two or three years, a Reuters poll of money market traders showed.

As troubles in the financial markets intensify 14 of 23 traders polled said they expect the ECB to announce further funding to fend off spiralling fears of a European banking meltdown that would send shockwaves across the global economy.

Only a third said the money would be lent at a premium.

They are doing everything they can, said one trader.

Forecasts for the regular weekly auction ranged from 200 billion to 280 billion euros, with the median just below last week's allotment of 265 billion euros.

Traders also expect the central bank to lend $10 billion in its three-month dollar operation that banks have shown a growing appetite for.

The ECB likely purchased 7 billion euros worth of peripheral debt last week, according to the poll.

The bank has so far spent around 203 billion euros under its Securities Market Programme on government bonds from the euro zone's periphery.

The three-month Euribor rate, the main gauge for unsecured interbank lending in the euro zone, was at 1.470 percent on Monday, marginally higher than Friday's fixing of 1.469 percent.

(Reporting by Ruby Cherian; Polling by Shaloo Shrivastava; editing by Anna Willard)