LONDON, July 17: The mark was firmer on the European cross rates Thursday as traders remained wary of extending short mark positions while the rumour mill spun with talk of central bank intervention and official protests.

The satisfaction of technical targets just above 3.00 onsterling/mark and 1.80 on dollar/mark has added to the temptation to book profits, analysts said.

Moreover, concerns about the release Friday of a strong June business activity index from German research institute Ifo and also speculation about the European Union's monetary committee meeting, also on Friday, underpinned the German unit.

"There are plenty of rumours about with people looking to get out of bad positions, but I'd Be wary of reading too much into any of them," said Peter Von Maydell, senior currency economist at UBS in London.

Traders said there was talk the Bank of Spain, Bank of Italy and Bank of England all bought marks for their domestic currencies in early trade but no one could confirm any dealings.

The dollar balked again at 1.80 marks after a series of offers were detected there in late trading on Wednesday and overnight in Asia. Sterling dipped back below 3.00 marks, meantime.

At 09:45 GMT, mark/lira was trading at 971.50/75 compared with 970.60/90 late Wednesday. Mark/peseta was at 84.16/19 compared with 84.15/18 yesterday and mark/Paris was at 3.3772/77 versus 3.3758/63.

Bundesbank council member Hans-Juergen Krupp was quoted in German magazine Wirtschaftwoche on Thursday as reiterating the central bank and government line that dollar/mark's correction was completed at current levels about 1.80.

Krupp said interest rates would not be used to influence the exchange rate alone, however, and he saw no need at present for German interest rates to rise.

"Talk that intervention doesn't work without a change in interest rates cuts little ice if you're a short-term player very short of marks. You don't want to be around to find out," said a trader at a Dutch brokerage in London.

Earlier this week, German Finance Minister Theo Waigel said currency markets were overreacting by taking the mark to its lowest levels in about six years against sterling and the dollar. He said Germany was in close contact with its partners in the Group of Seven industrialised nations about the issue.

On Wednesday, a German government spokesman said the moves should not be dramatised and were good for growth and jobs.

The advent of several other events has also encouraged traders to cover short mark positions. Apart from Friday's Ifo survey and EU monetary committee meeting, there is also some unease at being short of marks ahead of Monday's French public accounts audit.

French finance Minister Dominique Strauss-Kahn said late on Wednesday that the French budget deficit is currently above 3.5 percent of gross domestic product.

Analysts said a number much beyond that could spark some fresh doubts about the viability of starting European monetary Union on time and buoy the mark.Talk about the monetary committee meeting, meantime, varied from a possible revaluation of the Irish punt to appropriate EMU conversion rates and external value of the euro.

Officials denied the punt was on the agenda but confirmed there would be discussions on the latter two issues.

One view is that if ERM central rates are deemed to be the appropriate EMU conversion rates, then central banks may agree to act to prevent further mark weakness dragging currencies too far from existing parities. Concern about confidence in the euro may also encourage them to keep a lid dollar/mark, analysts said.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.