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Asian fixed-income investors optimistic about euro, pound

Asia's biggest fixed-income investors were most "positive" on the British pound of the four major currencies in the second quarter, according to a survey by Citigroup Inc, the third-biggest foreign-exchange trader.

The pound's sentiment index, derived from 21 investors that include banks and insurance companies, was at 1.12 on a scale that runs between -2 and +2.

They also became more positive on the euro, with the index rising to 0.94, from 0.66 last quarter.

By contrast, investors were more pessimistic about the US dollar, with the negative sentiment rising to 0.61, from 0.16.

"Sentiment on currencies is in line with the market trend that saw euro, sterling continue to gain versus the dollar," said the report, written by Hong Kong-based analysts Wei Wang and Terence Scheit.

The pound last month rose to a 26-year high against the dollar as accelerating inflation prompted investors to anticipate interest-rate increases from the Bank of England, which met yesterday.

The euro reached a record high on April 27 against the US dollar as the European Central bank raised borrowing costs.

Twenty-eight percent of the participants were based in Singapore, 24 percent each in Hong Kong and Taiwan, 14 percent in China and 10 percent elsewhere.

Participants also became less positive on Asian currencies and reported less interest in mortgage and asset-backed securities.

That may be because of the "fallout" in the US subprime mortgage sector, Citigroup said.

Delinquencies among the riskiest home loans in the US helped push New Century Financial Corp into bankruptcy.
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