Money markets scale back ECB rate hike bets on coronavirus variant worries

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FILE PHOTO: Headquarters of the European Central Bank (ECB) are illuminated with a giant euro sign in Frankfurt

LONDON (Reuters) – Euro zone money markets on Friday scaled back bets on a rate hike from the European Central Bank next year as news of a new coronavirus variant spreading across South Africa cast a shadow over the short-term economic outlook.

Money market futures were pricing in roughly a 50% chance of 10 basis point rate hike from the ECB in December 2022, having fully priced in such a move earlier this week.

That move was reflected by a smiliar pull back in rate hike bets in the United States and Britain.

The latest COVID headlines news comes as Europe already battles a resurgent outbreak of the virus, triggering fresh restrictions in a numebr of countries.

(Reporting by Dhara Ranasinghe; Editing by Rachel Armstrong)

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