Europe Government Bonds Slide on Speculation ECB to Indicate Higher Rates

(Bloomberg) -- European bonds fell on speculation
the European Central Bank will this week reiterate its preference
for higher interest rates as economic growth in the region
maintains momentum.

Ten-year German bunds, Europe's benchmark, declined for the
first day in five on speculation policy makers will leave rates
at a six-year high of 4 percent at their Aug. 3 meeting and
signal increases are likely by year-end. Debt also slid on views
the longest weekly rally since March last week drove yields too
low for the outlook for borrowing costs.


Read more at Bloomberg Bonds News

European Government Bonds Little Changed Before Today's Inflation Report

(Bloomberg) -- European government bonds were
little changed before a report today that will probably show
inflation held near the European Central Bank's target last
month, boosting the case for higher interest rates.

The European Union will probably say consumer prices in the
13-nation euro region increased 1.9 percent in June from a year
earlier, the same as in May, according to economists in a
Bloomberg survey. ECB policy makers last week said benchmark
borrowing costs remain supportive of economic growth.


Read more at Bloomberg Bonds News

Dollar May Decline Against the Euro Before Speech on Inflation by Bernanke

(Bloomberg) -- The dollar may fall versus the euro
before a speech on inflation by Federal Reserve Chairman Ben S.
Bernanke, who might say rising prices are still a concern.

The euro has gained 1.3 percent versus the dollar since the
Fed left benchmark interest rates at 5.25 percent for an eighth
meeting on June 28 when it said a moderation in inflation hasn't
been ``convincingly demonstrated.'' European Central Bank
President Jean-Claude Trichet signaled on July 5 the bank is
ready to add to its eight interest-rate increases since 2005.


Read more at Bloomberg Currencies News

Euro Rises to All-Time High Against Yen Before ECB Interest-Rate Meeting

(Bloomberg) -- The euro rose to an all-time high
against the yen and traded near a record versus the dollar on
prospects the European Central Bank will signal plans to raise
its benchmark interest rate at least once more this year.

The euro has gained 3.2 percent versus the dollar in 2007 as
the spread between German and U.S. two-year notes declined to the
narrowest in 2 1/2 years. ECB President Jean-Claude Trichet today
may keep borrowing costs at a six-year high and suggest further
increases. The pound was near a 26-year high against the dollar
on speculation the Bank of England will raise rates today.


Read more at Bloomberg Currencies News

Dollar near 26-year low vs pound before BoE and ECB

(Reuters) - The dollar stayed near a 26-year low against sterling and a two-month trough versus the euro on Thursday as investors awaited interest rate decisions by the European Central Bank and Bank of England later in the session.

The euro approached an all-time high against the yen on expectations that the European Central Bank President Jean-Claude Trichet will reinforce market views for higher rates even as the central bank is seen standing pat for now at 4.0 percent.


Read more at Reuters Africa

ECB Likely to Keep Rate Unchanged, Consider a Ninth Increase in September

(Bloomberg) -- The European Central Bank will
probably keep interest rates unchanged, preferring to wait for
confirmation that economic growth is fanning inflation before
raising borrowing costs again, a survey of economists shows.

Policy makers meeting in Frankfurt today will keep the
benchmark refinancing rate at 4 percent, according to all 42
economists in a Bloomberg News survey. The bank will raise the
rate to 4.25 percent in September, a separate survey shows.


Read more at Bloomberg Bonds News

U.S. Treasuries Fall After European Bonds Decline on Interest-Rate Concern

(Bloomberg) -- U.S. 10-year Treasury notes fell
after Europe's government bonds slid for a second day yesterday
on speculation the European Central Bank will keep increasing
interest rates from a six-year high.

Notes also dropped after stocks gained in Europe and Asia
yesterday, reducing demand for the relative safety of government
debt. The U.K. government lowered its assessment of the National
Threat Level to ``severe'' from ``critical,'' which was the top
level set following two attempted car bombings last week.


Read more at Bloomberg Bonds News

Euro Trades Near Record High Versus Dollar, Yen Before ECB Policy Meeting

(Bloomberg) -- The euro traded near a record high
against the dollar and the yen on bets the European Central Bank
will signal at least one more interest-rate increase this year.

The ECB, which economists expect will hold rates at 4
percent today, may say policy is still accommodative and
inflation is a concern. The euro has gained 3.2 percent versus
the dollar this year as the spread between German and U.S. two-
year notes declined to the narrowest in 2 1/2 years. The British
pound was close to the strongest in 26 years on speculation the
Bank of England will lift borrowing costs today.


Read more at Bloomberg Currencies News

Trichet 'Vigilance' Vow Gives Way to Less Visilibility, More Volatility

(Bloomberg) -- In the annals of central-banker
buzzwords, ``strong vigilance'' is probably about to go the way
of ``measured pace.''

Investors and economists who've grown used to European
Central Bank President Jean-Claude Trichet's vow to be on
constant lookout for signs of faster inflation are likely to
find the term disappearing from his pronouncements.


Read more at Bloomberg Bonds News

Gold, Silver Futures Climb in New York as Euro Rises Against U.S. Dollar

(Bloomberg) -- Gold and silver rose in New York
after a decline in the value of the dollar against the euro
increased the appeal of precious metals as alternative
investments.

Gold usually moves in tandem with the euro, which rose the
most against the dollar in more than two months on signals the
European Central Bank may continue to raise interest rates this
year. Before today, gold had gained 2.5 percent this year, while
the euro had climbed 1.5 percent against the dollar.


Read more at Bloomberg Commodities News

Euro Falls After German Investor Confidence Unexpectedly Declines

(Bloomberg) -- The euro extended losses against the
yen and the dollar after a report today showed investor
confidence in Germany, Europe's largest economy, unexpectedly
declined.

The ZEW Center for European Economic Research in Mannheim,
Germany, said today its index of investor and analyst
expectations fell to 20.3 from 24 in May, which was below
economists' expectations for 29 in a Bloomberg News survey. The
single currency earlier touched a record against the yen and
reached its highest in more than a week versus the dollar on
speculation the European Central Bank will keep raising interest
rates.


Read more at Bloomberg Currencies News

European Yields Hold Near Six-Year High on Policy Maker's Hawkish Remarks

(Bloomberg) -- European two-year note yields held
near the highest in more than six years as European Central Bank
official Jose Manuel Gonzalez-Paramo said monetary policy was
still accommodative, indicating interest rates in the region have
further to rise.

The drop in benchmark debt also sent 10-year bund yields to
near their strongest since August 2002 as traders add to bets the
ECB will lift borrowing costs twice more this year. Germany's
Bundesbank said in a report today first-quarter growth in
Europe's largest economy was ``remarkable.''


Read more at Bloomberg Bonds News

Swiss Franc Declines to Record Versus Euro as Rate Gap Spurs Carry Trades

(Bloomberg) -- The Swiss franc dropped to a record
low versus the euro as speculation Switzerland's policy makers
will lag behind the European Central Bank in raising interest
rates prompted investors to pursue so-called carry trades.

The franc fell with the yen as investors favored higher
yielding currencies from the New Zealand dollar to the South
African rand. The currency used by 13 European nations benefited
as investors borrowed in francs to fund investments in the higher
yielding euro, which last week had the biggest weekly gain versus
the yen since the start of April.


Read more at Bloomberg Currencies News

European Bonds Set for Sixth Weekly Drop; ECB Signals Higher Interest Rate

(Bloomberg) -- European government bonds headed for
a sixth weekly drop after central bank officials said interest
rates may need to rise to curb accelerating growth in the $10.4
trillion economy.

The bonds are poised for the longest run of weekly losses
since January, pushing yields on benchmark 10-year debt to the
highest since August 2002. European Central Bank policy maker
Axel Weber said late yesterday that interest-rate policy is
``still far from being restrictive'' on economic growth.


Read more at Bloomberg Bonds News