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Financial markets set to catch World Cup fever

Written by: Staff

LONDON, May 10 Trading across European financial markets is expected to slow next month when investors take their eyes off the ball and instead watch the soccer World Cup.

Ronaldinho will replace European Central Bank President Jean Claude-Trichet as the main topic of conversation across dealing rooms and 4-4-2 will mean more than a bond yield or a profit figure.

''Trading volumes did fall four years ago, I expect it will be worse this time,'' said Simon Denham, chief operating officer at financial spreadbetting firm Capital Spreads.

Financial activity is also set to be hit because so many investment bankers are going to matches in Germany as part of corporate hospitality packages.

''Very few organisations, either in the Frankfurt or London financial communities, did not buy tickets,'' said Peter Csanadi, director of communications for iSE Hospitality, which has sold executive seats and boxes for the month-long tournament, which begins on June 9.

London banks had bought about 20,000 of the 350,000 hospitality tickets available, Csanadi added.

SALES DOWN Concerns that football will overshadow new deals has already compelled some companies to bring forward sales of equity or debt to beat the start of the tournament.

Data from French bank Societe Generale shows sales of investment-grade European corporate bonds during the Japan and South Korea tournament in June 2002 made up just 8.8 percent of the year's total.

This was a smaller proportion than in any other year between 2001 and 2005.

However, some analysts believe the effect on financial markets will be more limited this time if investment banks play ball.

''It comes in the summer as well when it all slows down anyway and on a day-to-day basis it will depend on who is playing,'' said Henk Potts, investment manager at Barclays Stockbrokers.

This tournament has a more work-friendly timetable than the last showpiece in 2002 which featured morning matches for European viewers because it was held in Asia.

However, key group games which take place during European afternoon trading hours include Argentina against Serbia on June 16 and Czech Republic versus Italy on June 22.

''If the banks want to maintain trading volumes they should let the traders view the games from their desks instead of them wandering down to local hostelries,'' Potts said.

SORE HEADS Staff levels could even be reduced on mornings following big evening games if traders are nursing sore heads after frequenting bars for too long, either drowning their sorrows after a defeat or celebrating a famous victory.

Rivalry between different nationalities across financial institutions is also expected with the tournament seen as wide open if favourites Brazil fail to retain their crown.

One Scottish debt banker said he had bet more than 100 pounds (186 dollars) on England to win, joking that the punt was an ''emotional hedge'' to offset the pain of any English victory.

Striker Wayne Rooney's broken foot may hamper England's chances but a good run from Sven-Goran Eriksson's team could have a positive influence on Britain's FTSE 100 top share index.

''If England are knocked out early it will have no effect at all but if England win or get to the semi-final it could have a profound effect. It could add 50-100 points on to the FTSE,'' said David Buik at Cantor Index.


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