THE EUROPEAN Central Bank (ECB) has signalled that euro-zone interest rates will rise on Thursday, and a quarter-point increase to 4.25 per cent is viewed as a near-certainty by analysts.
ECB speakers have tried to calm investors' fears by saying the central bank does not plan a series of interest-rate rises.
But money markets are pricing in more rate increases before December and investors have found little comfort in the guidance from policymakers.
This week's data releases will again underline the deterioration in growth prospects and rising inflationary pressures that trouble investors and policymakers alike.
Headline euro-zone inflation is forecast to increase from 3.7 per cent in May to 3.8 per cent in June's data, due out today. A further rise above 4 per cent looks likely in the second half of the year.
Inflation in Germany is running at 3.3 per cent, a near 15-year high. Spanish inflation has hit 5.1 per cent and Belgian inflation is near a 24-year high at 5.8 per cent.
Rising pricing pressures will be a key theme of the June purchasing managers' index (PMI) surveys of the manufacturing and service sectors, out tomorrow and on Thursday respectively.
The euro-zone PMI surveys suggest activity levels have started to contract in both sectors for the first time in almost five years. The PMI's employment measures have fallen sharply, which suggests the labour market is near a turning point.
May's unemployment rate, due tomorrow, is expected to remain unchanged at 7.1 per cent, but the clear risk is for an increase. Euro-zone producer prices for May, due on Wednesday, are expected to rise from 6.1 per cent year-on-year in April to 6.8 per cent.
In the UK, mortgage approvals are expected to plumb a new low in May's data, out today, with a fall from 58,000 in April to 48,000. Consumer credit is also expected to contract as households economise.
In the US, the Institute of Supply Management's non-manufacturing survey has shown tentative signs of improvement since January in business activity. But the labour market continues to weaken. Data on Thursday is expected to show June's non-farm payrolls down by 50,000. - (Financial Times service)
