Global Markets ECB rate cut talk pressures euro, lifts Bunds

Business & Markets 2013
Written by Reuters
Thursday, 16 May 2013 15:43
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LONDON (May 16): The euro slipped against the dollar and German
bond prices rose on Thursday on investor positioning for more monetary
easing by the European Central Bank following a run of weak economic
data.
Those expectations are likely to be reinforced when euro zone inflation
data for April is released at 0900 GMT, which is expected to show an
annual rate of just 1.2 percent, well below the central bank's target
range.
"I think it will confirm in everyone's mind there is no inflation risk," said
Sarah Hewin, senior economist at Standard Chartered Bank.
The euro slipped 0.2 percent to $1.2860, having hit a six-week low of
$1.2843 on Wednesday. The main German bond futures contract was
10 ticks higher at 144.78.
European shares were supported by the rate cut expectations but
opened little changed after hitting fresh multi-year highs on Wednesday.
The FTSE Eurofirst index of top European shares was 0.1 percent
lower in early trade.
Earlier, Asian markets had risen on news that Japan's economy grew
0.9 percent in the first quarter, the quickest pace in a year and beating
expectations for a growth rate of 0.7 percent.
"There's now proof that Abenomics is working and that the economy is
on a solid footing." said Yoshiki Shinke, senior economist, Dai-Ichi Life
Research Institute in Tokyo.
However, Japan's Nikkei index ended down 1 percent after having hit a fresh 5-1/2-year high though it is up nearly 44 percent
so far this year. - Reuters