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LONDON, March 17 (Reuters) - Following are five big themes likely to dominate thinking of investors and traders in the coming week, and the Reuters stories related to them.
Euro zone government bond yields have been volatile in the face of political headlines, but have been moving inexorably higher in recent weeks, for one simple reason – a growing economy is reducing the case for the ECB’s ultra-loose monetary policy stance. And from an obsession over when/if the ECB would taper its bond-buying, a fresh prospect has arisen: rate hikes. Other major central banks have wound down their bond-purchase programmes before increasing interest rates, and if the ECB were to follow this line, this would likely mean no hikes until around June 2018 at the earliest, even if tapering begins at the end of this year. But Europe is in something of a special situation as its deposit rate is deeply negative, and ECB policymaker Ewald Nowotny has raised the prospect of hiking rates while still actively buying bonds in the market. It appears the “normalisation” of monetary policy could happen much faster than the market expected.
* Investors ratchet up expectations for ECB rate rise in December
* ECB to decide later whether to raise rates or end QE first: Nowotny
* Fed rate hikes could spell end to global easing
It looks like there will be agreement on FX, but it's proving much harder to find common ground on trade and protectionism. According to a draft communique from G20 finance officials meeting in the German spa town of Baden-Baden, the standard warnings against competitive devaluations and excessive currency market volatility will be put back in. That wasn't on the cards, according to an initial draft earlier this month. But a crucial line from last year's text is missing: "We will resist all forms of protectionism." That points to fundamental disagreement between the Trump administration (whose mottos are 'Make America Great Again' and 'America First') and the other 19 countries around the table. Officials are still searching for a compromise, German Finance Minister Wolfgang Schaeuble said on Friday. A compromise probably will be found, but the prospects for harmonious relations between the world's major economic powers on trade look to be darkening.
* G20 seeks right wording on trade, Germany's Schaeuble says
* U.S. Treasury's Mnuchin says Trump does not want trade wars
* Japan, U.S. agree to abide by G7, G20 FX agreement
By Thursday, it will be just a month until the April 23 first round of voting in the French presidential election. The candidates are due to hold a first TV debate on Monday. After centre-right premier Mark Rutte saw off the populist challenge of Geert Wilders' Party of Freedom in the Dutch election, some analysts said the fact that opinion polls just about got it right should be reassuring for those banking on far-right candidate Marine Le Pen not winning in France. Polls would have to be very wrong indeed for her to win. Noteworthy, though, was that the relief rally after the Dutch election evident in the French/German bond yield spread was so fleeting. Within an hour, attention had turned to monetary policy and the prospect of higher ECB interest rates.
* ECB rate-hike talk sends short-dated bond yields to five-week highs
* ANALYSIS-Opinion polls score much-needed Dutch election win
* ANALYSIS-Goodbye deflation, hello inflation: investors position for turnaround
* France's Macron gains on Le Pen, Fillon in Ipsos poll
The British pound's resilience has arguably been remarkable, particularly given the political backdrop, which in the past week saw Scottish First Minister Nicola Sturgeon demand an independence referendum and the government make a U-turn on its budget. However, by far the most interesting moment was the Bank of England's flip towards a more hawkish stance on interest rates that can only really be a sign of its concern over sterling itself. If, as most major banks predict, the pound is heading for another 5, 10 or even 20 percent fall over the next few months, there is real reason to worry about the hardening of expectations for higher inflation when households are already feeling hard-pressed. So, conversely, prodding historically-low market interest rates slightly higher, by stemming the pound's fall, may help the mood. The catch? If retail sales worsen badly on Thursday, the pound is likely to fall.
* Sterling jets higher on BoE interest rate split
* Bank of England's Forbes votes for rate hike, others may follow soon
* UK's Hammond forced into U-turn on jobs tax after party revolt
5/ HIKE, WHAT HIKE? Central banks in emerging markets such as China, Hong Kong, the Gulf and Turkey may have been quick off the mark to tighten monetary policy in the wake of the U.S. Federal Reserve finally delivering its well telegraphed interest rate hike. But the story looks different in Moscow where policy makers on Friday will deliver their latest verdict on interest rates, currently standing at 10 percent. The bank said recently inflation had been slowing faster than forecast and there was still room to trim rates before end-June. President Vladimir Putin warned that cutting too early could cost a great deal. Colombia's central bank, meeting the same day, is also expected to trim rates in a bid to prop up growth. Meanwhile central bank officials in Poland are also expected to leave rates unchanged when meeting on Tuesday. Policy makers in Nigeria are scheduled to give their verdict the same day though much of the focus will be on the country's controversial FX policy. Philippine's central bank governor has already said he saw no need for change ahead of the bank's decision on Thursday.
* POLL-Colombia's central bank seen cutting key rate to bolster economy
* Philippine central bank sees no need to tweak monetary policy after Fed
* Turkish central bank carefully tightens policy as political heat rises
* Russian rouble was close to short-term equilibrium in Feb - cenbank (Reporting by Jamie McGeever, Abhinav Ramnarayan, Patrick Graham, Karin Strohecker and Nigel Stephenson; Editing by Robin Pomeroy)