U.K. TRADE FIGURES BUOY HOPES OF INTEREST RATE CUT

  The release of U.K. February trade data
  showing that the current account surplus was a provisional 376
  mln stg, up from a 73 mln surplus in January, has boosted hopes
  of an early cut in interest rates, analysts said.
      Market forecasts had been for a worse outcome, with
  expectations of a deficit in visible trade averaging about 750
  mln stg, against the official figure of 224 mln stg, sharply
  narrower than January's 527 mln deficit.
      "The figures are unreservedly good," Chase Manhattan
  Securities economist Andrew Wroblewski said.
      Sterling rebounded on the trade figures, reversing a weaker
  morning trend, to stand at 72.1 pct of its trade weighted index
  against a basket of currencies at midday, unchanged from
  yesterday's close but 0.3 points above the 1100 GMT level.
      The market had feared that a deteriorating non-oil trade
  pattern would undermine international support for sterling,
  which has been the motor behind the recent fall in U.K.
  Interest rates. Money market sources said the market had begun
  to doubt that a widely expected drop in bank base lending rates
  to 9.5 pct from the present 10.0 pct was really on the cards.
      But sentiment now looks to have turned about again.
      There now looks to be no danger that the Chancellor of the
  Exchequer Nigel Lawson's forecast of a 1987 current account
  deficit of 2.5 billion stg will be exceeded, Wroblewski said.
      Seasonally adjusted figures showed imports rose in February
  to 7.16 billion stg from 6.73 billion in January.
      Exports rose to a record 6.93 billion from 6.20 billion.
      However, Chris Tinker, U.K. Analyst at brokers Phillips and
  Drew said the faster rise in exports than imports would prove
  partly aberrational in coming months. He forecast the
  Chancellor's Budget tax cuts would increase consumer
  expenditure on imported goods.
      However, Warburg Securities economist Ian Harwood said his
  firm was sharply revising its 1987 current account deficit
  forecast in the light of the latest data, cutting one billion
  stg off the expected full year total to about 1.75 billion stg.
      He said news of strong growth in exports of non-oil goods
  confirmed recent bullish surveys among members of the
  Confederation of British Industry.
      The growth in imports appears to be flattening, even if
  January's bad weather had curbed consumer spending on overseas
  goods and import-intensive stock building among manufacturers,
  Harwood said.
      U.K. Government bonds, or gilts, surged by more than 1/2
  point on the better-than-expected news, as earlier worries
  about the figures evaporated.
      Sterling peaked at a high of 1.6075 dlrs, before settling
  to a steady 1.6050 about 1300 GMT, nearly a cent higher than
  the European low of 1.5960.
      However, analysts noted that the turnabout in market
  sentiment still looks highly vulnerable to political news.
      Morning weakness in sterling and the gilt market was
  largely attributed to a newspaper opinion poll showing that the
  Conservative government's support was slipping.
      LONDON, March 26 - The Bank of England said it provided 15
  mln stg in assistance to the money market this morning, buying
  bank bills in band two at 9-13/16 pct.
      Earlier the Bank revised its money market liquidity
  forecast from a flat position to a deficit of around 350 mln
  stg.
  

