By James Langton

(October 6 – 09:00 EST) – In the wake of yesterday’s interest rate decision in the U.S., market reactions have been rather sanguine in Asia and Europe. And S&P futures have been marginally up all morning.

The European markets are mixed in early trading. While they accepted the U.S. interest rate decision with equanimity, traders are now worried about a possible move in rates by either the Bank of England or the European Central Bank.

The Euro, which only a few months ago was flirting with U.S. dollar parity, is suddenly too strong. Yesterday it hit a two-month high against the U.S. greenback. Today it was announced that German manufacturing orders increased 5.1% in August, much faster than expected, the biggest rise in almost 10 years. These factors have put markets on rate watch; decisions are due later this week.

The FTSE 100 is down about 11 points and the German DAX has dropped 11 too. In Paris, the CAC 40 is up about 30 points.

There are a couple of merger deals in the offing in Europe today too. Allianz AG, the Eurozone’s second biggest insurer, is admitting that it’s in talks to buy Pimco Advisors Holdings LP for about US$4.4 billion. Pimco is the U.S.’s biggest domestic bond fund manager.

In Asia, market reaction to U.S. interest rates was rather muted. The Nikkei closed up 112 points on the news; while the Hang Seng index finished up just 19 points.

In other business news, copper giant Phelps Dodge Corp. has finally agreed to a deal with Asarco Inc. for US$2.12 billion in cash, stock and assumed debt. The deal creates the world’s biggest copper firm, although Cypress Amax, which first agreed to merge with Asarco and was subject of its own bid from Phelps, appears to have escaped for now.

MTC Mortgage Investment Corp. says it has an agreement in principle to acquire MCAP Financial Corp. for $32 million in stock, subject to shareholder and regulatory approval. Following the deal MTC and MCAP shareholders will each own about 50% of MTC. The deal is expected to close on January 1, 2000.

Golden Star Resources, which trades on the TSE and Amex, is announcing that Peter Bradford is its new president and chief executive, effective November 1. Bradford is currently managing director of Anvil Mining NL.