950825

Italian futures end

changed in lacklustre

MILAN: Italian futures ended little changed after a lacklustre, range-bound session stymied by lack of volumes and ideas, dealers said.

Traders reported increasing roll-over activity from the September contract into the December BTP as options traders moved to hedge their positions in the longer dated contract.

"That was the main activity on Friday" one dealer commented.

Traders expected another quiet session on Monday, with the UK closed for a one-day bank holiday, and many said the present lull could be extended into the rest of the week as attention turned towards the 1996 budget.

"Italy might find it hard now to rally before the budget is presented in mid-September," said Mario Innecco, broker at Citifutures in London, adding: I think the best bet for next week is for the contract to move in a range of 103.26-104.80."

A trader in Milan was also expecting a slight near term correction. "We have failed to break resistance at 104.65 all this week.....a down move now looks inevitable," he said.

The three month Eurolira contract saw a slight correction during the session, dipping eight basis points to 89.72, after the Bank of Italy refused all bids under 10 percent at this morning's 7.0 trillion lire repurchase tender.

"It was a clear sign the central bank wants to keep rates steady and the short end of the curve suffered as a result," the Milan dealer said. "The long end did a bit of catching up," said Citifutures' inneco.

The lira eased slightly on the back of dollar softness, shrugging off comments by Budget Minister Rainer Masera to Reuters Financial Television that the currency's current levels could be appropriate for negotiations on re-entry to the European Exchange Rate Mechanism (ERM).

"I think he's being a little optimistic," a forex trader said.-Reuter