* ECB, BoE hold rates, focus turns to 1230 ECB press
* Shares, bonds hold ground as Yellen bolsters supportive
* Separatists ignore Putin calls to postpone Ukraine
* China exports, imports beat forecast
By Marc Jones
LONDON, May 8 The euro was back at a two-month
high on Thursday as the European Central Bank resisted calls for
a rate cut to cool the currency.
The ECB left euro zone interest rates at record low 0.25
percent at a meeting in Brussels, leaving focus on a 1230 GMT
news conference with President Mario Draghi to see if the bank
is any closer to agreeing alternative options to tackle the
bloc's uncomfortably low inflation.
Signs the economy is picking up and the fact government
borrowing costs are still falling has given the bank some
breathing space, but the worry is it could sour again if the
euro keeps on rising and snuffs out the fledgling recovery.
The euro had climbed in the run-up to the decision and
confirmation that there was to be no cut this time around lifted
it to $1.3952 to match a two-month peak it reached
earlier in the week.
Traders said it could quickly fall back towards support just
under $1.3800 in the event of any policy surprises, though any
doubts the ECB was preparing for some form of easing in the
coming months could send it upwards again.
"Our view is if there is going to be any policy easing it
will be in June when they will have new economic forecasts,"
Bank of Tokyo Mitsubishi foreign exchange strategist Lee Hardman
"If (ECB President) Mario Draghi doesn't escalate the
concern over the strength of the euro at the press conference
then the euro will rise, probably above $1.40."
Share and bond markets were also on the front foot, boosted
by supportive comments from U.S. Federal Reserve chief Janet
Yellen on Wednesday and signs that Russia is trying to avoid a
full-blown conflict in Ukraine.
Upbeat Chinese trade data overnight meanwhile provided some
signs of stabilisation in the world's second-largest economy.
As midday approached, the FTSEurofirst 300 index of
top European shares was up 0.3 percent at 1,348 points, as the
FTSE in London, the CAC 40 in Paris and
Frankfurt's Dax gained similar amounts.
A shade of caution had seeped back in earlier after
pro-Russian separatists in eastern Ukraine ignored a public call
by Russian President Vladimir Putin to postpone a referendum on
Having rallied hard in recent days on hopes the crisis may
be settling down, Russian stocks came to a
shuddering halt, while the rouble fell back from a 2-1/2
month high against the dollar.
Mario Draghi is under pressure from countries like France to
ensure the euro doesn't strengthen so much that it derails the
bloc's economic revival.
Any lingering hopes for an immediate easing by the bank were
dealt a blow by German Finance Minister Wolfgang Schaeuble, who
said central banks now needed to pare back their money printing
to avoid inflating fresh asset bubbles.
Wall Street futures pointed to a near flat start in
New York later. Earlier in Asia, Tokyo's Nikkei share average
had ended up 0.9 percent, while MSCI's broadest index of
Asia-Pacific shares outside Japan rose 0.5
percent to climb away from five-week low.
It came after China's exports and imports returned to slight
growth in April after a surprise fall last month, offering signs
that Beijing's use of targeted policy measures to underpin
growth may be starting to stabilise the economy.
Mainland Chinese shares rose 0.8 percent, also
helped by bets on further stimulus measures after the central
bank warned of a deepening economic slowdown.
Sentiment had already been buoyed after comments on the
"considerable slack" in the U.S. labour market from Yellen had
bolstered the view the Fed would stay in supportive mode for
plenty of time yet.
She, along with a quartet of fellow Fed policymakers, will
speak later in the day in the United States.
The 10-year U.S. Treasury yield edged higher in
European trading but remained not far off Monday's three-month
low of 2.572 percent. German and other core euro zone bonds
moved in tandem, with Bunds at 1.480 percent.
The pound held near a five-year high against the dollar on
rising expectations the Bank of England, which earlier had also
held rates steady, will tighten policy before
the Fed, probably early next year. It last stood at $1.6941
versus this week's high of $1.6997.
The Australian dollar climbed 0.6 percent to $0.9382
after local data showed that employment had risen more
than expected in April.
With risk sentiment improving slightly, the yen stepped back
from a three-week high to 101.70 yen on the dollar while
gold and oil steadied at $1,292.60 per ounce and
$107.76 a barrel, respectively.
(Editing by Catherine Evans and Nick Zieminski)