European interest rates in focus

Will the Bank of England raise interest rates today? Reuters says the latest data say yes, but the data yesterday were actually quite mixed.

Nationwide's consumer confidence index fell to 95 in June from a 1-1/2 year high of 99 in May.

On the other hand, the Chartered Institute of Purchasing and Supply/NTC index of activity in the services sector rose to 57.7 last month from 57.2 in May. The input price index rose to 58.8 from 58.3, the highest since March, while the output price index rose to 53.3 from 52.5.

The UK housing market could be slowing though. Halifax said house prices rose 0.4 percent in June, taking the annual three-month rate to 10.7 percent. As it is, housing equity withdrawal had eased to 13.2 billion pounds in the January to March quarter from a downwardly revised 13.3 billion pounds in the fourth quarter of 2006.

And while UK inflation has been uncomfortably high of late, little of that inflation can be seen in the BRC shop price index, which was only 0.5 percent above the level a year ago in June, although it was up 0.2 percent from a month ago.

The European Central Bank also meets today, but no rate hike is expected from it. The data from the euro zone have generally been strong, as Bloomberg reports.

Growth in European service industries, the biggest part of the economy, accelerated to the fastest pace in a year in June, suggesting the European Central Bank may need to raise interest rates again to contain inflation.

Royal Bank of Scotland Group Plc said its services index rose to 58.3 from 57.3 in May...

The jobless rate fell to 7 percent in May, the European Union statistics office said yesterday, the lowest since revised data series began in 1996.

However, Eurostat reports that retail sales in the euro area fell 0.5 percent in May from April and gained only 0.4 percent from a year ago.