Gold Declines in London as Central Banks May Increase Sales; Silver Falls

(Bloomberg) -- Gold fell in London on speculation
European central banks will increase sales of the precious
metal. Silver also dropped.

The European Central Bank said yesterday three members of
the Eurosystem of national banks sold 288 million euros ($397
million) of gold last week, equal to about 18 metric tons and up
from 88 million euros the week before. European central banks
may sell 157.6 tons in the next nine weeks, or an average of
about 18 tons a week, according to World Gold Council figures.


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European Bonds Decline for Second Day on Stocks, Interest-Rate Outlook

(Bloomberg) -- European government bonds fell for a
second day as a surge in global equity markets eroded demand for
less risky assets, and on speculation the European Central Bank
will keep raising interest rates.

The drop in debt pushed 10-year yields up from near the
lowest in a week, as concern waned that the downgrading of
subprime mortgage-backed bonds in the U.S. may crimp growth in
the wider economy. Bonds also fell as traders bet the European
Central Bank will keep lifting borrowing costs to curb inflation.


Read more at Bloomberg Bonds News

European Government Bonds Gain on Signs German, French Growth Is Slowing

(Bloomberg) -- European government bonds advanced
for a second day as signs of slowing growth in the euro region's
two biggest economies prompted investors to pare bets the
European Central Bank will raise interest rates again this year.

Ten-year bonds rose, pushing yields down from near a five-
year high, as reports showed German wholesale prices grew at the
slowest pace for two years in June and French manufacturing
declined in May for the first time in six months. Bonds were also
buoyed by speculation yields already reflect the prospects of
further rate increases by the ECB.


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Yen Declines to Record Low Against Euro on Prospect of Higher ECB Rates

(Bloomberg) -- The yen slid to record low against the
euro as the prospect of higher interest rates may increase the
appeal of European assets to Japanese investors.

European Central Bank President Jean-Claude Trichet said
yesterday he has ``no intention'' to change market expectations
for a rate increase as soon as September after the central bank
kept borrowing costs at 4 percent. Policy makers may reiterate
that message later today. The yen has dropped 6.5 percent versus
the euro this year as Japan's 0.5 percent borrowing cost
encouraged investors to send money abroad.


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European Government Bonds Head for Weekly Decline on Outlook for ECB Rates

(Bloomberg) -- European government bonds are set to
drop this week, extending the worst quarterly slide in almost
eight years, after European Central Bank President Jean-Claude
Trichet signaled policy makers may need to lift interest rates
further by year-end.

Benchmark debt has fallen, sending 10-year bund yields to
near a five-year high, as investors add to bets the ECB will lift
borrowing costs half a point by year-end. Bonds fell yesterday
after Trichet said inflation in the region needs ``careful
monitoring.'' The ECB earlier kept its key rate at 4 percent.


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Euro Falls From Record Against Yen as ECB Leaves Interest Rate Unchanged

(Bloomberg) -- The euro fell from an all-time high
against the yen after the European Central Bank kept borrowing
costs unchanged.

The common currency also fell against the dollar after
policy makers left the benchmark interest rate at a six-year high
of 4 percent, as forecast. ``Our monetary policy is still on the
accommodative side,'' ECB President Jean-Claude Trichet said at a
press conference after the decision.


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ECB Likely to Keep Rate Unchanged, Consider a Ninth Increase in September

(Bloomberg) -- The European Central Bank will
probably keep interest rates unchanged, preferring to wait for
confirmation that economic growth is fanning inflation before
raising borrowing costs again, a survey of economists shows.

Policy makers meeting in Frankfurt today will keep the
benchmark refinancing rate at 4 percent, according to all 42
economists in a Bloomberg News survey. The bank will raise the
rate to 4.25 percent in September, a separate survey shows.


Read more at Bloomberg Bonds News

U.S. Treasuries Fall After European Bonds Decline on Interest Rate Concern

(Bloomberg) -- U.S. 10-year Treasury notes dropped
after Europe's government bonds slid for a second day yesterday
on speculation the European Central Bank will keep increasing
interest rates from a six-year high.

The yield on the benchmark 10-year note rose 2 basis points
to 5.06 percent as of 7:56 a.m. in Singapore, according to bond
broker Cantor Fitzgerald LP. The price of the 4 1/2 percent
security due in May 2017 fell 5/32, or $1.56 per $1,000 face
amount, to 95 21/32. A basis point is 0.01 percentage point.


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Dollar Is Near Record Low Against the Euro Before Interest-Rate Meetings

(Bloomberg) -- The dollar was near a record low
versus the euro and the weakest in 26 years against the pound
before two European central bank policy meetings tomorrow.

The Bank of England is forecast to raise borrowing costs
while the European Central Bank may signal future increases to
tame inflation. The dollar has dropped 3 percent against the euro
and 2.9 percent versus the pound this year on bets the Federal
Reserve will keep interest rates unchanged, dimming the allure of
U.S. assets relative to those in the euro region and U.K.


Read more at Bloomberg Currencies News

Platinum, Palladium Rise as Falling U.S. Dollar Boosts Investment Appeal

(Bloomberg) -- Platinum and palladium rose in New
York along with other precious metals as a decline in the U.S.
dollar boosted their appeal as alternative investments.

The dollar fell to a two-week low against the euro after
European Central Bank President Jean-Claude Trichet suggested he
may extend interest-rate increases. Platinum, mostly traded in
dollars, has risen 14 percent this year as the dollar dropped
1.5 percent against a basket of six major world currencies,
including the euro.


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Euro Little Changed Versus Dollar, Yen Before German Confidence Report

(Bloomberg) -- The euro was little changed before a
report today that economists say will show investor confidence in
Germany, Europe's largest economy, rose to the highest in a year.

The currency earlier touched a record against the yen and
reached its highest in more than a week versus the dollar on
speculation the European Central Bank will keep raising borrowing
costs to quell inflation. ECB executive board member Jose Manuel
Gonzalez-Paramo said yesterday monetary policy was accommodative,
indicating interest rates have room to rise from 4 percent.


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Kenya's central bank cuts interest rate to 8.5 pct

(Reuters) - Kenya's central bank said on Monday said it had cut its key CBR interest rate to 8.5 percent from 10 percent.

"The Monetary Policy Advisory Committee (MPAC) held its fifteenth meeting on Wednesday ... and advised the CBK (Central Bank of Kenya) to set the CBR at 8.5 percent," a weekly bulletin from the central bank said. "The Central Bank concurred with the recommendation."


Read more at Reuters Africa

Gold, Silver Drop as Higher Interest Rates May Curb Demand for the Metals

(Bloomberg) -- Gold and silver fell in New York on
speculation that higher global interest rates will reduce demand
for precious metals as alternative investments.

Bond yields climbed around the world after the Reserve Bank
of New Zealand unexpectedly raised rates today. The European
Central Bank yesterday raised a benchmark rate to 4 percent, the
highest in six years, to temper inflation. Holding gold becomes
less attractive when rates rise because the metal has no fixed
returns.


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Rand pares losses on rate rise

(Reuters) - The South African rand pared losses after the central bank raised benchmark interest rates on Thursday by half a point to 9.50 percent.

The rand which was starting to strengthen from session lows on hawkish comments from Central Bank Governor Tito Mboweni strengthened even further after monetary policy was tightened. The move was expected by the financial markets.


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Euro Declines From Record Versus Yen as Traders Reduce Rate Bets After ECB

(Bloomberg) -- The euro dropped from a record high
against the yen and weakened versus the dollar as European
Central Bank President Jean-Claude Trichet's remarks led traders
to reduce bets on two more boosts in interest rates this year.

The European currency weakened as the ECB, which increased
its benchmark lending rate to 4 percent as economists expected,
reduced its growth outlook and held its inflation forecast
steady for next year. The yen strengthened as a decline in U.S.
stocks and rising bond yields in Japan led investors to reduce
speculation against the currency.


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US STOCKS-Futures drop on inflation, rate worry

(Reuters) - NEW YORK, June 6 - U.S. stock index futures
indicated a weaker start on Wall Street on Wednesday, on
concern that creeping bond yields will crimp demand for equity
investments.




The European Central Bank raised interest rates by 25 basis
points to 4 percent as expected on Wednesday, which could put
pressure on global bond yields to rise. U.S. stock index
futures held steady well below fair value. Interest-rate
jitters sent stocks lower on Tuesday as higher bond yields pose
competition for stocks.


Read more at Reuters.com Bonds News

European Stocks Drop on Interest-Rate Concern; E.ON, Iberdrola Fall

(Bloomberg) -- European stocks declined for a third
day on expectations the European Central Bank will raise interest
rates today and signal further increases.

E.ON AG and Iberdrola SA led a drop by utilities, among
companies most sensitive to shifts in borrowing costs. Thales SA
fell after Societe Generale SA downgraded the stock.


Read more at Bloomberg Stocks News

Gold Futures Pare Gains in New York on Central Bank Sales; Silver Rises

(Bloomberg) -- Gold in New York pared earlier gains
on speculation that central banks will increase bullion sales.
Silver rose.

European central banks will probably sell all 500 metric
tons of gold allowed under an agreement that goes through Sept.
26, UBS AG said in a report today. UBS previously forecast sales
of 400 tons. Gold gained 1.5 percent on June 1, partly because
the European Central Bank, one of the signatories of the accord,
said it won't sell more gold until September.


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ECB's Trichet warns of credit market vulnerability

(Reuters) - European Central Bank president Jean-Claude Trichet warned on Tuesday that credit markets face three vulnerabilities that could trigger an upset to robust global growth and soaring financial markets.

Low risk premia on debt instruments, the explosion of unregulated hedge funds and private equity firms combined with their widespread use of complex new credit derivative instruments form a "triangle of vulnerability", Trichet told international bankers at a conference.


Read more at Reuters Africa

Gold Increases in Asia Trade as Weaker Dollar Boosts Appeal; Silver Rises

(Bloomberg) -- Gold gained in Asia amid speculation
a fall in the dollar will help to boost demand for the precious
metal as an alternative investment. Silver also rose.

Gold generally moves in tandem with the euro which gained
against the dollar on speculation Europe's inflation rate will
quicken, boosting the prospect the European Central Bank will
raise interest rates tomorrow. Gold has risen 5.6 percent this
year, while the euro gained 2.2 percent.


Read more at Bloomberg Commodities News