U.K. MONEY DATA MAY EASE RATE CUT, ANALYSTS SAY Slower than expected growth in Britain's narrow M0 money supply measure in February will help spur a further cut in U.K. Interest rates if a surge in sterling's value requires such a move, economic analysts said. M0, the only targeted money supply measure left after Chancellor of the Exchequer Nigel Lawson scrapped the official target for the broad sterling M3 measure in his 1987 budget speech on Tuesday, fell an adjusted 3/4 to one pct in February. On an annual basis, this put M0 growth at four to 4-1/2 pct, in the middle of the 1987 target of two to six pct. "The M0 data are much better than we expected," said Robert Thomas, economist at Greenwell Montagu Securities. He and other analysts said while the better than expected M0 figures alone would not be sufficient to trigger a new interest rate cut, they removed an obstacle to such a move. Thomas noted the rise in M0 had been kept in check despite buoyant retail sales in February, advancing an adjusted 2.2 pct after a fall of the same size in January. Analysts said the M0 measure, reflecting variations in consumer demand rather than real inflation prospects, was not an adequate indicator to determine interest rates. "The authorities still seem to want to pretend that M0 is important ... In practice, it is likely to be the exchange rate and the election which call the tune," Lloyds Merchant bank chief economist Roger Bootle wrote in a budget comment. Richard Jeffrey, economist at stockbrokers Hoare Govett, said in a comment: "It is unlikely that (Lawson) will respond to signals from M0 alone ... Reinforcement from exchange rate trends is necessary before action is taken." "With the Chancellor making clear that policy manoeuvres are made in response to signals from this narrow money variable, the City has been forced to take it seriously," he added. Noting this point, Thomas said market fears at the end of last year of an M0 overshoot had now disappeared. This removed a potential obstacle to a further cut in U.K. Base lending rates if foreign demand for sterling pushed up the pound above unofficial targets, analysts said. Such targets are believed to have been secretly agreed between finance ministers of the Group of Five and Canada at their Paris meeting last month, they added. U.K. Base rates have been cut twice by half a point since the Paris agreement, once on March 11, and again yesterday when foreign demand for sterling surged in reaction to a sharp cut in 1987 government borrowing targets contained in the budget. They stand at 10 pct now, and foreign exchange dealers and analysts expect them to shed another half-point in the coming week. Analysts shrugged off as largely irrelevant a higher than expected increase in February sterling M3, which pushed the annual growth rate to almost 19 pct, well above the previous target of 11 to 15 pct. Thomas said the February figures seemed to indicate the improvement in sterling M3 growth witnessed over the past few months had been reversed, but firm conclusions could only be drawn after revised data are released on March 31. Some analysts said foreign investors had long ceased to watch the sterling M3 target, and Lawson's move to scrap it altogether earlier this week removed whatever was left of its credibility as a key factor in monetary policy.