Washington sheds no tears over Lafontaine

THE GERMAN Finance Minister Oskar Lafontaine's resignation was greeted with quiet relief in Washington, where his calls for stricter curbs on world financial markets had caused growing dismay.

The Clinton administration had no immediate comment on the news, which boosted financial markets amid hopes Mr Lafontaine's surprise departure would be good for Europe's slowing economy.

But analysts cheered the move, predicting that it was set to help the Group of Seven top world economies overcome a deep rift over how to reform financial markets, and may make it easier for the European Central Bank to cut interest rates.

"This is good news for the G7 and it is even better news for the [ECB]. Now that the pressure is off them, we may get even more good news: a cut in interest rates," said Peter Kenen, a Princeton University economics professor who advises the US Treasury Department on international affairs.