SINGAPORE, May 4 Reuters Europe39;s stock markets and the euro sagged on Thursday as investors waited for another European Central Bank rate rise after the U.S. Federal Reserve signalled that its marathon hiking run might finally have hit pause.

Another rout in regional U.S. bank shares overnight was hardly helping spirits, but with gold a whisker away from a record high and oil higher after a tough few days, focus was naturally on Frankfurt.

Economists polled by Reuters expect the ECB to raise its borrowing rates for a seventh meeting in a row albeit the consensus is for a smaller quarterpoint move rather than the halfpoint jumps it has been favouring recently.

Matt Ward, a portfolio manager in the global equities team at Barings, said after the Fed had done a decent job threading the needle on Wednesday with its quarter point rise, the ECB would be watched closely.

I am not in the camp of expecting a shock 50 basis point hike, but it39;s tough to see anything but a continuation of the hawkish tone, he said, pointing to the run of relatively robust data and low unemployment in key countries like Germany.

That likely ECB tone was evident in the bond markets where benchmark government bond yields, which drive the cost of borrowing across Europe, were nudging higher.

It was fractional stuff though. Germany39;s 10year yield was up just 1 basis point at 2.26 and well down from where it was a month ago, while Italy39;s was only 2 bps higher at 4.152.

We39;re…