LONDON MONEY MARKET CLOSES LITTLE CHANGED
Money market interest rates closed little
changed after a quiet session as yesterday's talk of lower U.K.
Base lending rates fizzled out, dealers said.
    Further opinion polls showing the ruling Conservative Party
well ahead had little effect on the market with operators
looking for more definite news on the political front. Sterling
continued quietly steady ahead of the Group of Seven talks in
Washington this week.
    One senior money broker commented, "What we want is an
election date to put a stop to all the speculation. Once the
market knows what's happening then we can move forward."
    The next move in U.K. Base rates, which now stand at 10
pct, is still expected to be down but uncertainty over the date
of a general election is making for cautious trading, dealers
said.
    Yesterday, opinion polls showing the Government was set to
retain a substantial working majority lifted sterling and
fuelled speculation about lower U.K. Interest rates.
    The British authorities are likely to remain cautious,
however, as the G-7 finance ministers meeting is set to review
their February Paris accord on currency stability. This could
affect sterling which today was just one basis point lower in
trade weighted terms to stand at 72.3.
    Dealers noted that longer dated paper again dominated the
day-to-day dealings between the discount houses and the Bank of
England. As rates fell yesterday, no band four bills, which
have a maturity of between two and three months were
transacted. Today, however, these again appeared but the
majority of the Bank's assistance was provided in the one to
two months range.
    The key one and three months interbank rates were unchanged
quoted at 10-1/16 9-15/16 and 9-7/8 3/4 pct respectively. Until
fresh economic or political news emerges, dealers say they
expect the market to continue around these levels with only
technical factors provoking small fluctuations in rates.
    The Bank of England forecast a 900 mln stg shortage in the
system today but provided only 713 mln stg assistance. Despite
this, overnight interbank traded in the 11 to 10 pct range
having started the day at around 10-1/4 10 pct.
    Period interbank rates were little changed with six months
quoted at 9-3/4 5/8 and one year at 9-5/8 1/2 pct.
    Sterling CDs were also mostly steady with six and nine
months ending the day at 9-9/16 7/16 pct and 9-1/2 3/8 pct
respectively. Eligible bank bill rates showed no change from
late yesterday with one month at 9-13/16 25/32 pct and three
months at 9-17/32 15/32 pct.
 REUTER
