To: t2 who wrote (18211 ) 2/11/2001 8:59:34 AM From: zbyslaw owczarczyk Respond to of 24042 ECB Panel Seen Holding Key Interest Rate at 4.75% on Thursday By Sonja Dieckhoefer Frankfurt, Feb. 11 (Bloomberg) -- The European Central Bank will probably keep interest rates on hold this week as industrial production and consumer spending suggest the region can withstand a slackening in the U.S. economy. All 17 economists surveyed by Bloomberg News forecast the ECB's governing council will keep its main refinancing rate at 4.75 percent when policy-makers meet Thursday. The bank almost doubled borrowing costs between November 1999 and October last year to tame inflation. There's been little from ECB officials to show they are ready to reverse course. While the bank said three days ago that growth may slow, reports last week showed the French and German economies -- the two biggest in the euro zone -- on track to expand quicker than the U.S. ``The ECB's tone is a touch softer, but the fundamentals still suggest the bank will hold rates,'' said Manuela Preuschl, an economist at Deutsche Bank Global Markets Research. ``For now, the ECB is at best preparing for the preparation of a rate cut.'' The 18-member ECB panel will announce its rate decision at 1.45 p.m., Frankfurt time. Problems Abroad The push for lower rates is coming mainly from abroad, analysts said. Central bankers around the world are keen to ward off the threat from a slowdown in the U.S., where the Federal Reserve sliced borrowing costs one percentage point last month. Last week, the Bank of England cut its key rate a quarter-point to 5.75 percent, the first reduction in 20 months. A ``more significant than previously expected'' slowdown in U.S. growth may damp exports for manufacturers in the euro area, the ECB said in its monthly report on Feb. 8. The U.S. economy grew at an annual rate of 1.4 percent in the fourth quarter, the slowest pace since 1995. There's scant evidence of similar weakening in the euro-area, analysts said. German industrial production rose for a second straight month in December, while manufacturing orders rose for a third straight month, reports showed. French consumer confidence surged to an all-time high in January . German business confidence, though, fell for a seventh month in December. ``The euro-area growth slowdown is so far mainly evidenced by confidence surveys, while other data are still robust,'' said Holger Fahrinkrug, an economist at UBS Warburg in Frankfurt. The ECB ``has only just returned to a neutral bias.'' Commerzbank AG economists expect the euro region's economy will probably expand 2.8 percent this year, compared with growth of 1.8 percent in the U.S. Italy, Germany Italy's economy may grow 0.4 percent in the fourth quarter, slowing from 0.6 percent in the previous three months, according to the median forecast of eight economists surveyed by Bloomberg. Economic growth probably slowed to 2.3 percent in the year, from a 2.5 percent annual rate in the third quarter, the economists said. The Italian GDP figures will be released Friday. In Germany, figures on Tuesday will probably show the country's trade surplus fell to 7 billion deutsche marks ($3.3 billion) in December from 8.6 billion marks a month earlier, according to the median forecast of 18 economists surveyed by Bloomberg News. German retail sales, also published Tuesday, probably rose 0.5 percent in December from November and fell 0.2 percent from a year ago, according to a median of 13 economists' forecasts. Elsewhere in Europe, France is likely to notch a trade deficit of 1.7 billion francs ($240 million) in December, turning from a surplus of 100 million francs in November, six economists said. France's trade figures are published on Thursday. The following is a table with key indicator releases from European Union economies. All times are Frankfurt times: Monday, Feb. 12: 9:30 Spanish unemployment 9:30 Dutch consumer prices 10:30 U.K. producer prices 10:30 Dutch retail sales Tuesday, Feb. 13: 8:00 German trade 8:00 German retail sales 9:15 Spanish consumer prices 10:30 U.K. retail prices Wednesday, Feb. 14: 8:00 German wholesale prices 8:45 French current account 10:30 U.K. jobs and wages 11:30 U.K. quarterly inflation Thursday, Feb. 15: 8:45 French trade balance 9:00 Italian industrial production 9:15 Spanish retail sales 9:30 Dutch GDP 10:00 Italian GDP 10:30 U.K. retail sales 13:45 ECB rates announcements Friday, Feb. 16: 8:45 French payrolls 8:50 French industrial production 9:30 Dutch unemployment Saturday, Feb. 17: All Day G-7 Finance ministers and central bankers meet