* Poland holds rates as expected, but says in easing bias
* Poland prices 750 mln SFR 2014 bond
* FX give back gains as resistance strong
* Germany's Ifo sentiment index seen as mediocre
(Adds Polish rate decision; fresh comments)
By Marton Dunai and Marius Zaharia
BUDAPEST/BUCHAREST, Aug 26 (Reuters) - The Polish zloty was
little moved after the central bank left rates flat as expected
on Wednesday and tracked its peers to trade weaker after a
recent rally hit strong resistance at key levels.
Poland's central bank kept its benchmark rate unchanged at
3.5 percent, in line with market expectations that policymakers
would hold fire as the economic outlook improves and inflation
remains high. []
In comments following the decision, however, it said it
still remained in an easing bias [], but this did
not convince some in the markets.
"To be honest no-one really takes this comment on easing
bias very seriously," said one Warsaw-based dealer. "The market
is rather focusing now on incoming data that are better and
better."
The Polish zloty <EURPLN=>, which led morning gains was 0.6
percent weaker on the day at 1442 GMT, in line with the Czech
crown <EURCZK=> and the Hungarian forint <EURHUF=> which also
lost 0.4-0.7 percent.
The crown touched its highest level to the euro since Dec. 1
on Wednesday and dealers said 25.250 was too strong to be broken
today. The forint faced resistance close to 265, and the zloty
fell before reaching 4.05 on technical factors as well.
Germany's Ifo sentiment index, widely watched in the region
for clues about the health of Eastern Europe's biggest export
market, came out at 90.5 versus a Reuters estimate of 88.9.
"It was good, of course, but not that good," a dealer in
Budapest said. "For a continued rally we need a steady flow of
great news, which we do not have right now."
Local stock markets were mostly lower after recent gains.
The Budapest bourse, which briefly passed the 20,000 point mark,
also slid back below that and into negative territory.
BONDS WEAKER
Polish bonds yields were up some 1-3 basis points across the
curve. Poland also priced a five-year, 750 million Swiss francs,
with a 3 percent coupon [].
A finance ministry official told Reuters demand for Polish
bonds remained high and the European Union's largest
ex-communist member mulled euro- and yen-denominated issues
later this year. [].
Czech bonds were weaker along the curve on Wednesday,
pulling back from recent gains.
Money market rates were quiet, but were seen tracking
western peers with the strength of the crown currency having a
fading impact.
"The impact on rates seems to be limited yet as another rate
cut by CNB is not on the cards," Komercni Banka said in a note.
Hungarian bond yields rose by about 10 basis points,
reflecting the weaker regional sentiment, after sharp falls in
the past days around Monday's 50 basis point interest rate cut
by the central bank.
"Yields have been pulled down a lot, I would not be
surprised at a correction," one Budapest-based trader said.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.454 25.341 -0.44% +5.1%
Polish zloty <EURPLN=> 4.106 4.081 -0.61% +0.22%
Hungarian forint <EURHUF=> 268.43 266.6 -0.68% -1.82%
Croatian kuna <EURHRK=> 7.318 7.318 0% +0.64%
Romanian leu <EURRON=> 4.223 4.211 -0.28% -4.94%
Serbian dinar <EURRSD=> 93.251 93.147 -0.11% -4.04%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +1 basis points to 62bps over bmk*
4-yr T-bond CZ4YT=RR -18 basis points to +123bps over bmk*
8-yr T-bond CZ8YT=RR +10 basis points to +258bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +3 basis points to +367bps over bmk*
5-yr T-bond PL5YT=RR +2 basis points to +320bps over bmk*
10-yr T-bond PL10YT=RR 0 basis points to +283bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +8 basis points to +627bps over bmk*
5-yr T-bond HU5YT=RR +15 basis points to +565bps over bmk*
10-yr T-bond HU10YT=RR +9 basis points to +488bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1742 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Marton Dunai and Marius Zaharia, Editing by
Toby Chopra)
