8:30 AM ET - Mid-day European Market Update

Interest rates across Europe were o the rise on the back of yesterday’s rate hike by ECB of 0.5%. The Bank is concerned that the steady rise in inflation for the last 13 months may fuel further rise in inflation in the coming months. Traders are betting that the rate will rise in the coming months to 3%. In France 10-year bond rose to 3.58% and in Italy rose to 3.79% whereas Germany’s two year government bond rose to 3.09%. Short-term bond rates are likely to rise faster in the coming months.

According to the European Commission the economy of 12- nations of euro zone is likely to grow at a faster pace than a year ago. The Commission is forecasting a rise of 0.7% in the first, second and third quarter of this year. The Statistics agency also said that in the fourth quarter the economy expanded at 0.3% in the fourth quarter and for the year 2005 it grew at 1.7%. Profits at the European corporations are rising too.

Volkwagen, largest European car maker, reported that its commercial vehicle division has returned to profitability in 2005 and higher earnings are likely in this year on the back of new models and lower production and labor costs.

LVMH, France based world’s largest luxury goods maker, reported a jump in profit of 22% in the second half of the year 2005.


8:00 AM ET - Asian Market Update

Larger markets in Asia closed lower in inflation worries in Japan and rising crude oil price.

In Tokyo Nikkei 225 index closed lower 1.55% and in South Korea KOSPI index closed down 2.83%. January inflation, excluding food and energy, was reported at 0.5% for the third month in a row causing fears among traders that interest rates may soon start rising. Toyota, Honda and other exporters were hurt on the concerns that earnings in Yen may be lower.

Markets in India closed 0.3% lower after rising this week near all-time high of 10,600. Of the major movers HDFC and ICICI Bank closed lower 2.8% and 1.8% respectively. Tata Motors rose 4.7% as the company released that its vehicles sales rose 22% in February. Market rose for four days in a row before closing lower on Friday. Market is likely to move side-ways in the coming months as financial and railway budget have been released.

Markets in Taiwan closed lower 1.34% following the lead from Japan, Hong Kong and South Korea.