FOREX-Euro boosted, month-end demand

FOREX-Euro boosted by rate expectations, month-end demand






Euro zone flash inflation rises to 2.6 pct year-on-year

* Euro firms broadly as interest rates expected to rise

* Month-end demand helps euro, Irish stress test results due

(Adds comment, details, updates prices)

By Neal Armstrong

LONDON, March 31 (Reuters) - The euro rose broadly on Thursday as above-forecast euro zone inflation cemented the case for higher interest rates from the European Central Bank, though analysts cautioned against a rapid rise in the currency.

Traders said significant quarter-end and fiscal year-end flows were helping to boost the euro, at the expense of the dollar in particular.

Official euro zone estimates showed consumer prices jumped 2.6 percent year-on-year in March, up from 2.4 percent in February and more than market expectations.

They supported comments from European Central Bank policymaker Lorenzo Bini Smaghi who on Wednesday implied the central bank's policy is to gradually raise interest rates. Markets see the tightening cycle starting in April. [ID:nLDE72T1ZS]

"The euro has priced in a lot of good news so it's hard to see it moving rapidly higher, but it can definitely continue on the upside," said Raghav Subbarao, currency analyst at Barclays Capital.

"The ECB wants to show they are concerned about inflation but there are clearly other risks and they have kept the full allotment of open market operations given concerns about financial stability."

Ireland later on Thursday announces the results of stress tests that are expected to signal the effective nationalisation of the entire financial system, but few analysts were expecting a major reaction from the single currency.

"Ireland is not a big risk to the euro as there is no systemic risk thanks to the euro zone rescue fund. Confidence is being driven by the larger euro zone countries," said Manuel Oliveri, currency analyst at UBS in Zurich.

The euro rose 0.6 percent against the dollar EUR= to $1.4220, approaching its 2011 high of $1.4249. Traders cited demand from European central banks, while adding that a break of option barriers at $1.4250 would be needed for further momentum on the upside.

The single currency hit a 10-month high versus the yen EURJPY=R around 117.90 yen.

Given the market's certainty that the ECB will deliver a 25 basis point rate rise next month, analysts said the market's focus was on how far and how fast rates will continue to rise, adding that such forecasts will determine the euro's outlook. "There is nothing in the inflation figures that suggests that the ECB needs to move forward more aggressively and the euro is vulnerable to a repricing of tightening risk once next week's rate hike is out of the way, said Lena Komileva, global head of G10 strategy at BBH.

http://www.reuters.com/article/2011/03/31/markets-forex-idUSLDE72U19O20110331

Departing Berkshire Exec Wants to Start Own Firm

The high-ranking Berkshire Hathaway executive who suddenly resigned this week says he wants to start his own investment firm patterned after Warren Buffett's company.
David Sokol appeared on CNBC Thursday, one day after Buffett announced that Sokol had resigned. Many investors believed that Sokol had been the leading candidate to eventually replace Buffett as Berkshire Hathaway's CEO.
Sokol says he has been thinking of resigning for more than two years, and the time was right now because the Berkshire subsidiaries he oversaw are all in good shape.
Sokol told CNBC he wants to set up "mini Berkshire Hathaway" similar to the investment partnership Buffett set up in the 1960s.
Sokol says he likes to build companies but never aspired to be Berkshire's CEO.
Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

http://abcnews.go.com/Business/wireStory?id=13263566