The Austrian government is beginning talks with the nation’s banks to gain their support for winding down nationalised Hypo Alpe-Adria-Bank International in a way that keeps it off the state’s books.

Austria must split off the bad assets of Hypo Alpe Adria Bank International by the end of March or face another capital injection for the nationalised lender, the central bank governor said.

EUROPEAN Central Bank council members including Axel Weber and Yves Mersch said the surge in oil prices risks pushing up inflation as economic growth accelerates, indicating the bank is poised to raise interest rates.

EU finance ministers opened a two-day meeting yesterday, determined to stand by their euro at a time of political turmoil over the French and Dutch rejection of the European constitution and Britain’s decision not to put it to a vote.

The British economy, Europe’s second-largest, may outpace the euro region for a fifth year in 2004, suggesting the central bank will raise interest rates more quickly than its European counterpart, surveys of economists showed.