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		Home Page Mortgage News You Can Use EU Finance Ministers Oppose Currency Sales, Clear Way for Further Advance Feb. 10 (Bloomberg) -- European finance ministers said they won't push the European Central Bank to drive down the euro by buying dollars, clearing the way for a further rise in the 12- nation currency. Ministers including Francis Mer of France and Rodrigo Rato of Spain said no action is needed beyond Saturday's Group of Seven condemnation of the volatility that has lifted the euro 13 percent against the dollar in the past six months. ``The markets can do what they want because they are free,'' Mer told a news conference during a European Union meeting in Brussels. He said the G-7 statement was ``very clear.'' Earlier, ECB Chief Economist Otmar Issing told Germany's Sueddeutsche Zeitung newspaper that he opposes short-term steps to steer exchange rates. The euro's appreciation makes exports by companies such as Siemens AG and Gucci Group NV more expensive, hampering Europe's recovery from economic growth estimated at 0.4 percent in 2003, the weakest pace in a decade. The euro bought $1.2769 at 1:45 p.m. in Brussels. It slipped from a record high of $1.2899 on Jan. 12 after ECB President Jean- Claude Trichet spoke out against ``brutal moves'' in currency markets. ``A strong and stable euro is good for Europe,'' Spanish Economy Minister Rato said. Asked if he is scared by the euro's current level, he said: ``No. I don't think scared is the right word.'' Monetary Diplomacy European governments may be trying to keep currency traders off balance by playing down the threat of euro sales by the central bank, said Andrew Delano, a currency analyst at financial markets research firm IDEAglobal in New York. ``Intervention wouldn't be as effective if it were telegraphed to the market,'' so by damping speculation intervention is more likely, ``maybe it would make the market more susceptible,'' Delano said. The European economy probably grew 0.4 percent in the fourth quarter, the same pace as the third, according to a Bloomberg News survey of economists. An initial estimate for the period will be released on Friday. ``The effect of a further euro appreciation on growth would be just minor,'' Austrian Finance Minister Karl-Heinz Grasser said. The Group of Seven declaration ``speaks for itself,'' Irish Finance Minister Charlie McCreevy told reporters after chairing a meeting of ministers from the 12 euro countries late yesterday. Interest Rates The ECB last week left its main interest rate at 2 percent, skipping the chance for a cut in deposit rates that might diminish the euro's appeal for international investors. ``I don't think it's wise for finance ministers to comment on short moves in exchange rates,'' Luxembourg Prime Minister Jean-Claude Juncker said. ``We are fully supportive of the G-7 communique.'' Turning to national budgets, the EU steered clear of the controversy that erupted in November when France and Germany lined up enough allies to vote down calls for further budget cuts in 2004. Finance ministers said France, the second largest country in the euro region, risks breaching EU deficit limits for a fourth year in 2005 unless it prunes spending or boosts taxes in that year. Deficits ``The cumulative improvement in the cyclically adjusted balance under way may be insufficient to bring the nominal deficit below 3 percent of GDP even in 2005,'' the ministers said in a statement. Deficits have been expanding as growth slows, crimping tax receipts and boosting welfare costs. The German-designed stability and growth pact requires governments to keep their deficits below 3 percent of gross domestic product. Italy was also criticized for relying too much on ``one-time measures'' to bring down its deficit and running the risk that its shortfall will exceed EU limits in 2004 for the first time since the euro's debut in 1999. ``If economic conditions turned out to be weaker than currently foreseen, the deficit threshold may already be breached in 2004,'' the statement on Italy said. Germany's deficit will be discussed at the next meeting. EU Spending U.K. Chancellor of the Exchequer Gordon Brown repeated his opposition to European Commission proposals to keep the ceiling on central EU spending at 1.24 percent of gross domestic product from 2007 to 2013. Brown said the proposal, to be released later today, would cost EU budget contributors $37 billion. He called for capping spending close to the 0.98 percent of combined GDP being disbursed this year. ``At a time when each member state is having to take tough decisions on spending and show fiscal discipline, it is unacceptable and unrealistic for the commission to propose a 25 percent increase in its spending,'' Brown will tell EU ministers today, according to excerpts of his statement released by the U.K. Treasury. Britain's spending equals 42 percent of its national GDP, EU estimates show. The EU average is 48 percent. The EU gave Britain, one of three EU countries outside the euro, permission to overstep the deficit limit in 2004 because low debt and taxes give the U.K. ``room for maneuver.''   Back to Original Article: Mortgage News You Can Use   Continue with: DIARY-U.S. Treasuries, Tuesday, Feb 10 Analysts look for strong 2004 U.S. economic growth OPEC Springs Surprise Oil Output Cut SEC calls for fraud investigation Housing Affordability Improves In Fourth Quarter The Mortgage Market This Week Mortgage Application Volume Holds Steady Tax Advocates Pressure House Declaration Fails To Give Dollar a Boost Inventories, Sales Rose in Dec. Bush hits road, touting economy Euro Falls as EU Wants Weaker Currency Treasuries Higher on Hopes of Demand
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