ECB tipped to hold interest rates

Until the global turmoil, prompted by woes in the US housing market, rates had been tipped to rise from 4% to 4.25% for countries using the euro.

However analysts are expecting the ECB to adopt a wait-and-see policy as witnessed elsewhere around the world.

Central banks of Brazil, Australia and Canada froze their rates this week.

And the Bank of England is expected to hold its interest rate at 5.75%.

Market Nerves

The recent turmoil has been triggered by a US housing slowdown, with a surge in defaults on loans given to borrowers with weak or nonexistent credit histories - known as the sub-prime sector.

As accessing credit has become harder, banks have in turn become loath to lend, contributing to market nerves.

Central banks worldwide have been stepping in by pumping cash into the banking system.

"Central banks around the world are pausing. Market players are trying to discern what all this financial turbulence means," said David Cohen, an economist at Action Economics.

Latest official data put inflation across the 13 nations in the eurozone at 1.8% in July, down from 1.9% the month before.

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