THE German Bundesbank may announce its first interest rates rise for seven months next week as rates throughout the European Union begin to move in preparation for the introduction of the single currency at the beginning of next year.

''We think the Bundesbank is going to raise rates when it meets next week. They are looking around to see what's happening in the rest of Europe and they are seeing lots of growth momentum,'' said Steve Barrow, a currency strategist at Bear Stearns International.

Although the Bundesbank council member Klaus-Dieter Kuehbacher maintained yesterday that there was no need for the central bank to increase interest rates when it meets on May 14, the bank's president, Hans Tietmeyer, has already indicated that events elsewhere in Europe would have to be taken into account when the German central bank considers its rates.

And there may be a move by the bank next week to reassert its position on monetary policy after the messy agreement at the weekend between EU leaders on the first president of the new European Central Bank.

Speculation that German interest rates might rise was fuelled by yesterday's unexpected announcement by Denmark's central bank, which closely shadows the Deutschmark, that its key repurchase rate would be raised by half-a-point today from 3.75% to 4.25%.

The move comes as the country is in the grip of a major pay dispute - now in its second week - involving nearly 500,000 workers. The strike has brought private sector transport, manufacturing and construction to a halt. It is also adding to the government's problems as it prepares to mobilise a Yes vote in the referendum on the EU's new Amsterdam treaty in three weeks time.

In a statement the Danish central bank noted that there had been a tendency for the crown to weaken in recent months and in a bid to keep the currency steady against the German mark and other core European currencies ''a rise in the central bank's interest rates is necessary''.

Meanwhile, in a further sign of interest rates across the EU gradually converging in preparation for the arrival of the euro, Spain's central bank, as expected, lowered its benchmark interest rate yesterday to 4.25%. This brings it closer to those in most of the 11 countries which will be founding members of the single currency.

In addition, Italy's Foreign Minister Lamberto Dini indicated that the possibility now existed of cutting his country's short-term interest rates.

''When and how to cut the rates will be dictated by market conditions, but there is no doubt we must head in that direction,'' he said in an interview with La Repubblica newspaper.

Further signs of possible interest rate moves came with a statement from the Governor of the National Bank of Belgium, Alfons Vertlaetse. He indicated that Belgian short-term interest rates were likely to rise to about 4% amid signs of stronger economic growth, and said he expected rates in countries whose currencies are pegged to the Deutschmark to rise ''slightly'' before January.