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To: Zardoz who wrote (23500)	11/27/1998 6:11:00 PM
From: goldsnow	Respond to of 116796

Full story Analysts welcome ECB hints on policy views 10:57 a.m. Nov 27, 1998 Eastern By Tomasz Janowski FRANKFURT, Nov 27 (Reuters) - European Central Bank chief Wim Duisenberg dropped strong hints Friday that the ECB would consider growth and employment when setting rates and pleased economists struggling to interpret subtle comments on monetary policy from EU officials. Most market participants still expect the common euro zone refinancing rate to be set at the current German and French level of 3.30 percent and forecast a moderate cut some time later in the first quarter. But several analysts are warming to the idea that the ECB, prompted by more looming economic slowdown, may announce a lower starting rate at its December 22 meeting. They say Duisenberg and his fellow bankers may be now dropping the first hints. ''Markets don't know yet how to interpret ECB actions so it has to be careful not to surprise them and these comments are something that it is preparing them for a possible rate cut,'' said Michael Klawitter, economist at WestLB in Duesseldorf. Duisenberg, speaking earlier on Friday in London described European unemployment as ''unacceptably high'' and said the ECB and national central banks would do all they could to solve the jobless problem. And even though he stressed it was mainly national governments' job to address the mainly structural roots of joblessness he said monetary policy could also make some, albeit limited, contribution. ''In specific circumstances, if production, inflation and employment all move in the same direction, monetary policy can play some role in stabilising output and employment growth, without endangering price stability,'' Duisenberg said. Also ECB chief economist Otmar Issing, reputed for his tough monetary views, struck an unusual tone, saying on Thursday, the ECB shared public concerns about unemployment. Economists said both economic data and latest comments signalled that the odds that monetary union would start with lower interest rates, were rising. ''We have been expecting a rate cut some time next year. Now we see a good chance that a three-percent interest rate may be announced on December 22 and these comments just underline our view,'' said Elga Bartsch of Morgan Stanley Dean Witter. The ECB meets December 22 to set the euro-zone repo for January 4, 1999. Economists say clear signs of looming economic slowdown combined with record low inflation and a risk that euro may become too strong, all called for a monetary easing. Duisenberg presented a fairly optimistic picture of the European economy saying global financial turmoil has so far left few scars on the euro area and that ''somewhat weaker'' economic growth expected in 1999 would still generate new jobs. He also said that, based on the assumption that the worst of the global turmoil was over, the ECB predicted European growth picking up again in 2000. Analysts say gloomy business climate surveys and this week's French data signalling a clear slowdown in growth and investment in Europe's second-largest economy, may soon force the ECB to revise down its earlier forecasts. But some analysts say that even though the ECB may be hinting at the direction in which European rates will move, they are sceptical that monetary union will start with lower rates. ''Those comments rather show that the ECB has not made a decision yet and is leaving all options open,'' said Eckhard Schulte of IBJ Bank in Frankfurt. ''It can cut in December but even more likely it will move some time later because it will want to see the impact of cuts made in convergence adjustments and will want to steer through the transition period,'' Schulte added. Analysts said that even though the ECB would first of all look at hard economic data, a more conciliatory tone struck by euro zone finance ministers earlier this weak could make it easier for the ECB to make the rate move. Rather than repeat earlier outright calls for interest rate cuts finance ministers vowed to maintain fiscal discipline and sought the support of a ''more accommodative'' monetary policy. ''In the past we've seen strong pressure on rate cuts...Now as these calls have abated they are paving the way for the ECB to cut rates without appearing to be giving in to political pressure,'' Morgan Stanley's Bartsch said. ((Frankfurt Newsroom +49 69 756525, frankfurt.newsroom+reuters.com)) Copyright 1998 Reuters Limited

To: Zardoz who wrote (23500)	11/27/1998 6:14:00 PM
From: goldsnow	Respond to of 116796

Gold mostly recovers early losses in Europe 11:06 a.m. Nov 27, 1998 Eastern LONDON, Nov 27 (Reuters) - Gold overcame most of its morning softness during late European trade on Friday as shorts closed intra-day positions by buying on the second London fix, dealers said. One U.S. bank in particular had sold short in thin conditions during the morning, dealers said, encouraging others to follow as the spot price dropped from above $296.50 an ounce bid to a low near $295.00 half way through the day. The price move, while more impressive than Thursday's half dollar range in Europe, posed no threat to the steady $294.50/$298.50 range inhabited by gold for the past 10 days. London gold fixed at $296.15 in the afternoon versus the morning's $295.70. Spot metal was last at $295.90/$296.40, down 40 cents from its previous London close, with the market effectively closed given the absence of New York COMEX dealers for the second day of their Thanksgiving holiday. ''The general feeling is that by New York time on Monday we might be a little bit higher. We are mildly friendly towards it and towards silver as well,'' said one London dealer. Another factor was light hedge selling on behalf of Australian producers, the dealer said. Australian dollar gold lifted above A$465 in the last two days, its highest in two weeks. Silver was last unchanged versus its Thursday London close of $4.92/$4.95 while platinum was down $1.00 at $350.00/$352.00. Palladium was at $272.00/$277.00, off $3.00 from its previous London close. ((Patrick Chalmers, London Newsroom +44 171 542 8057. london.commodities.desk+reuters.com)) Copyright 1998 Reuters Limited