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European events

back in focus,

US data also looms

LONDON: European events are back in focus in the week ahead, with a Bundesbank meeting, a glut of British numbers and the run-up to an Italian election in the spotlight, economists said on Friday. More U.S. data also looms.

The Bundesbank holds one of its regular council meetings on Thursday. Recent comments from central bank leaders have sparked speculation that German official rates could head lower again.

"They're never going to have better circumstances than they have now for lowering interest rates," said Smith Barney chief international economist Paul Horne in Paris.

The German economy's sluggish behaviour and low inflation mean the Bundesbank can risk another cut or two, analysts said. The only nagging doubt may be high money supply growth.

Provisional M3 money supply for March could come as early as next week. Other German statistics on offer include wholesale and possibly producer price figures.

Nigel Richardson, head of bond research at Yamaichi International Europe in London, said M3 is set to decelerate.

"The only thing is will they (at the Buba) want the figures to be in the market before they cut interest rates?" he said.

British markets will be flooded with economic figures.

The week kicks off with producer price numbers on Monday, followed by average earnings and unemployment data on Wednesday, and then retail prices and public sector borrowing on Thursday.

"They should confirm that the economy is growing reasonably healthily," said Adrian Cunningham, senior currency economist at UBS in London.

Richardson of Yamaichi said the British inflation indicators would be the most significant and should show prices remain subdued.

Elsewhere, Italian markets will be on politics-watch during the last week of campaigning before April 21's general election.

Italian securities have been some of the top performing among world markets, with investors unfazed by the myriad of possible outcomes from the election.

"If anything the market seems to be discounting an awfully lot of good news on that," said UBS's Cunningham. "Our view is that too much good news is discounted."

But he added that in the medium term Italy's economy was well positioned, with a strong current account surplus under its belt. Analysts also note that Italian interest rates have lagged those in other high-yielding markets, which have been falling.

Other items on the European agenda include a Group of 10 central bank governors' meeting and a United Nations survey on the European economy on Monday.

In Washington, the IMF/World Bank Group spring meetings begin on Wednesday.

The U.S. has been grabbing headlines for the past week after recent data showing further jobs growth and as investors wonder whether inflation will pick up.

In the next week, March industrial production and capacity utilisation, out on Tuesday, will be the highlight. Also due are March housing starts on Wednesday.

"The three of those could trigger some trouble in the bond market (if they come out too strong)," said Horne of Smith Barney.-Reuter