EUROPEAN equity fund managers have given the thumbs-up to the restructuring of the European currency grid. The greater flexibility would give countries more scope to slash interest rates and kick-start their economies, making European funds more attractive to Hong Kong investors, most analysts agreed. ''Over the next two or three months, Hong Kong's more sophisticated investors are likely to switch their attention to European funds,'' said Simon Walters, Jardine Fleming's Hong Kong-based global investment director. ''Very little action can be expected here in Hong Kong in the meantime,'' he said. European ministers and central bank governors yesterday bowed to pressure from speculators and said they would temporarily widen the obligatory marginal intervention thresholds the ERM to plus or minus 15 per cent around the bilateral central rates. Dominic Konstam, economist for Credit Suisse First Boston in London, said: ''These changes are good news. We've been arguing for some time that this should happen. ''There had not been enough scope for France and Denmark in particular to get interest rates down. ''We can now hope to see French interest rates fall to four per cent from their current level of seven to eight per cent for three-month borrowing, which should get its economy going again. ''France has suffered most from the exchange-rate mechanism. It has good fundamentals and now has the most to gain.'' ''What was needed was the scope for growth. I would have thought the prospects are now looking very good indeed for non-German European equity funds.'' However, Carl Broecker, assistant general manager of Deutsche Bank Capital Asia in Hong Kong, said while the wider movement bands offered more flexibility, it made European equity funds more risky due to greater fluctuations. ''Hong Kong investors will be more cautious,'' he said. Jardine Fleming said Hong Kong investors should now be looking for funds that are underweight in Germany and overweight in countries such as Britain France, Spain, Belgium, Sweden and Italy. In Tokyo, analysts said the yen would continue to enjoy safe-haven status after the widening of fluctuation bands. But Yuji Kojima, chief dealer at Credit Lyonnais, said: ''The 15 per cent band means there's more room to speculate, which means that there will be more safe-haven flight to the yen.'' Olivier Gayno, chief economist at Japan Gamma Asset Management, said: ''I doubt if the new approach will really work [to calm the market].'' Sanjit Maitra, director of currency strategy at Barclays Bank, said: ''It's a float in all but name.''