LONDON, July 27 (Reuters) - U.S. interest rate expectations dominated financial markets on Wednesday before key economic data, with a slide in the euro towards 14-month lows against the dollar giving support to European stocks and government bonds.
But few investors were taking big positions before the U.S. durable goods data, due at 1230 GMT.
A strong number would reinforce expectations that the U.S. Federal Reserve will raise interest rates to four percent from 3.25 percent by the year end and perhaps further in 2006 -- widening the rate differential with Europe. The European Central Bank is seen holding rates steady throughout 2005.
<snip>
Meanwhile Japanese government bond prices hit one-month lows as Tokyo's Nikkei share index rallied 0.83 percent and nervousness grew that the end of the Bank of Japan's ultra-loose monetary policy might be getting closer.
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