US and Europe set to move apart on rates

This Week: With most major industrialised countries gearing up to raise rates but markets wondering if the United States will cut them, investors will focus this week on the European Central Bank's rate-setting meeting.

The Bank of England also makes a rate decision, and US data, including the monthly highlight of employment, will be scrutinised for the likelihood of a rate cut.

The ECB is widely expected to raise rates by 25 basis points to 3.25 per cent on Thursday, continuing a tightening campaign that has seen rates rise by 100 basis points since December 2005.

Traders will hang on ECB president Jean-Claude Trichet's word at the news conference following the Paris meeting for clues on the likely future path of euro-zone rates.

Mr Trichet said at the previous meeting that "strong vigilance" was of the essence on inflation, strongly hinting at more rate rises to come.

But investors became cautious last week about the severity of those risks, after September euro-zone inflation came in below the ECB's 2 per cent ceiling for the first time since January 2005, according to flash estimates.

Euro-zone September purchasing managers' data for the manufacturing sector (PMI) is due today, and is forecast at 56.5, unchanged from August.

The euro-zone services data on Wednesday is forecast to show a slight dip in September to 57.0, from 57.1.

Most economists believe the Federal Reserve is finished raising interests, but the timing of a possible cut remains open to debate. Investors will continue to scrutinise data closely for rate clues.

US non-farm payrolls on Friday are forecast to show a rise of 123,000 in September, a slight slowing of employment growth from August's 128,000. Average hourly earnings are forecast to rise 0.3 per cent, from a rise of 0.1 per cent the previous month.

Monday

Results: Alexon (H1), Avanti Screenmedia,

AGM: Gartmore Fledgling Trust, IG Group, LogicaCMG (egm), Mid Wynd, Yoomedia (egm).

Meetings: Platinum Developments hosts information session on economic implications of Bulgaria's entry into the EU (Buswells Hotel, Molesworth Street, Dublin).

Indicators: Irish manufacturing purchasing managers' index (Sep); euro-zone manufacturing PMI (Sep); US ISM manufacturing PMI (Sep); UK manufacturing PMI (Sep); German manufacturing PMI (Sep); French manufacturing PMI (Sep).

Others: Aer Lingus floats on stock market; ESRI issues quarterly economic commentary.

Tuesday

Results: MSB International (H1), Powerleague, Tesco (H1), Walker Greenback (H1).

AGM: Anite, House of Fraser (egm), Jupiter European Opportunities.

Meetings: SFA hosts annual conference (Dublin Castle, Dublin); workshop on workplace culture featuring Eddie Hobbs (Talbot Hotel, Portlaoise Road, Carlow); Enable Ireland hosts seminar on assistive technology (Berkeley Court Hotel, Dublin).

Indicators: Euro-zone producer prices (Aug); US lay-offs (Sep).

Wednesday

Results: Fonebak.

AGM: BAE Systems (egm), Henderson Strata Investments (egm), Misys.

Meetings: 11th Annual Northern Ireland economic conference - keynote speaker Bertie Ahern (Hilton Hotel, Templepatrick, Co Antrim).

Indicators: Irish services purchasing managers' index (Sep); euro-zone services PMI (Sep) and retail sales (Aug); US ISM non-manufacturing PMI (Sep) and factory orders (Aug); UK services PMI (Sep); German services PMI (Sep); French services PMI (Sep) and INSEE outlook (Q3).

Others: ECB president Jean-Claude Trichet testifies before European Parliament on SWIFT secrecy affair; BP issues trading statement.

Thursday

Results: Marriott International (H1), Ted Baker (H1).

AGM: Center Parcs (UK), Dream Direct, Lawrence.

Meetings: Cork chamber hosts conference on exploiting Cork's business potential (Cork Sheraton Fota Island Hotel, Fota Island, Cork); launch of the Financial Services Club Ireland (Royal Dublin Society, Ballsbridge, Dublin).

Indicators: French budget year-to-date (Aug); Japanese foreign reserves (Sep).

Others: European Central Bank and Bank of England announce interest rate decisions; United Drug issues trading statement.

Friday

Results: Bang & Olufsen (Q1), Aero Inventory, Waterman.

AGM: Abbey, Drax (egm).

Meetings: ISME conference (Heritage Hotel, Killenard, Co Laois).

Indicators: Irish live register (Sep) and earnings in distribution and business services (Q2); US inflation (Sep), non-farm payrolls (Sep), unemployment (Sep), average earnings (Sep) and consumer credit (Aug); UK industrial production (Aug) and manufacturing production (Aug); French OECD leading indicators (Aug); Japanese leading and coincident indicators (Aug).