August 29, 2002	Thursday	Jamadi-us-Saani 19,1423

LONDON, Aug 28: The euro held steady against other major currencies on Wednesday as the foreign exchange market responded in muted fashion to the release of yet more disappointing German economic data.

The single European currency stood at $0.9807 against 0.9815 on Tuesday evening.

The dollar traded for 118.47 yen from 118.17 the previous evening.

Germany’s Ifo economics research institute said the business climate in western Germany had cooled sharply again in August after a pronounced deterioration the previous month.

The survey’s headline index fell for the third straight month, to 88.8 points from 89.9 points in July, prompting Ifo to suggest that the German industrial upturn may have come to an end, at least temporarily.

However, Commerzbank economist Kamal Sharma said while the figures were slightly weaker than consensus expectations, they were nowhere near as bad as some had predicted.

We heard of rumours ahead of the release that the number was going to be in the low 80s, so the result could have been a whole lot worse, Sharma told AFP.

Sharma said given the weakness of the recent confidence survey by rival German economic research institute ZEW, the Ifo survey had actually prompted the euro to stage a slight relief rally.

The analyst said expectations that a profit warning by Canadian telecommunications group Nortel Networks would prompt fresh selling of US stocks when Wall Street trading commenced later Wednesday had helped staunch any latent demand for the US dollar.

Late Tuesday, the Canadian telecoms equipment group said it expects third-quarter earnings from continuing operations to fall by up to 10 per cent from the second quarter, and it announced it would lay off 7,000 workers.

Other analysts added that the prospect of further weak US data was another factor helping suppress demand for the US dollar at present.

ABN Amro economist Aziz McMahon cited the likelihood that US second-quarter gross domestic product data would be left unrevised on Thursday, as a factor likely to weigh on the dollar, while others pointed to the prospect of further weak data on US consumer confidence from the University of Michigan on Friday.

Earlier, data showing that the growth of the euro-zone money supply, which the European Central Bank views as a key indicator of future inflation, held steady in August, had little impact on the euro.

The ECB calculated that M3 money supply grew by 7.1 per cent on a 12-month basis in July, the same rate of change as in June.

The ECB has been signalling quite clearly that its main priority is to secure growth. Inflation is not the main worry right now, Sharma said.

The euro was changing hands at 0.9807 dollars against 0.9815 late on Tuesday in New York, 116.15 yen (116.20), 0.6389 pounds (0.6406) and 1.4678 Swiss francs (1.4671).

The dollar was being quoted at 118.47 yen (118.17) and 1.4971 Swiss francs (1.4921).

The pound was at 1.5351 dollars (1.5339), 181.83 yen (181.31) and 2.2978 Swiss francs (2.2893).

On the London Bullion Market, an ounce of gold rose to $312.35 from 310.50 late on Tuesday.—AFP