Economist says euro to lose parity with dollar

GLOBAL markets are set to recover but the euro, just above parity against the dollar in recent days, is expected to fall sharply against the US currency, according to a leading economist.

HBOS chief economist Adam Chester predicted an autumn Euro-zone interest from 3.25% to 3% and stressed the need for urgent reform of the EU Stability Pact.

He said global equity markets were showing tentative signs of a recovery, adding that productivity growth in the United States bodes well for future corporate earnings. Mr Chester expects, however, a sharp weakening in the value of the euro against the dollar, with the euro falling from its current $1.01 to $0.92 by the end of 2003.