Euro zone speculates on interest cut

BRUSSELS, Nov. 6 (UPI) -- European markets are speculating that euro-zone interest rates will be cut Thursday after statements that followed a euro-group meeting in Brussels Monday night.

The president of the European Central, Bank Wim Duisenberg, and his vice president, Christian Noyer, remained silent on the issue but political leaders were clearly angling for a rate cut.

Pedro Solbes, the European Commissioner

responsible for economic and monetary affairs, part of the EU executive, said news that the expected euro-zone inflation rate had fallen by 2.4 percent remarked gave the euro-zone "more room for manuever."

Euro-group chairman and Belgian Finance Minister Didier Reynders described the new inflation rates as "good news." He added that "the euro-zone economy is not in recession yet."

But the upbeat remarks contrast with the unusual intervention of normally dovish Bundesbank President Ernst Welteke, who was reported in interviews as hawkish on the issue stating that now was not the time to cut interest rates.

He said that the ECB should avoid creating a "speculative bubble" undermining speculation that the bank is likely to cut interest rates.

Belgian Minister Didier Reynders said of reports that the Belgian state-owned airline Sabena would be filing for bankruptcy Wednesday that management was negotiating with two white knight airline companys.

British Virgin Airways, owned by the multi-millionaire Richard Branson was, he said, in negotiations with another company.

A Commission spokesman expressed concern at the transfer of Sabena asset, the local airline DAT, saying that there was concern about state funding. The commission says DAT was bailed out by the Belgian government.