Start date hinges on the French

The uncertainty over whether EMU would go ahead on time in 1999, caused by Monday's snap-election announcement in France, was counter- balanced later in the week by the European Commission's favourable report on the economic prospects of the candidates for the single currency.

The Commission said 13 of the 15 candidates would qualify in 1999. It sent a clear signal that Italy would be excluded, saying its budget deficit would increase in 1998.

"The Commission's optimism stretches credulity. The point is it would rather dilute the criteria and have a broad EMU go ahead on time than delay it," said Eric Fishwick, international economist at Nikko Europe.

Polls suggesting party support in France was narrowing unsettled analysts. The opposition socialists, although they support EMU, want to ease the criteria for membership.

"If the new government opposes Germany on entry conditions, EMU will be delayed since EMU without France is inconceivable," said Alison Cottrell of Paine Webber.