* Stocks erase some early gains on Libya tension
* Hungary rate meeting minutes due 1300 GMT
* Czech central bank seen keeping rates on hold
(Adds bonds, updates markets)
By Luiza Ilie
BUCHAREST, March 18 (Reuters) - Emerging European stocks
shed some of their early gains on Friday, shrugging off support
from G7 intervention to curb the Japanese yen, while the
region's currencies were mixed.
Polish, Hungarian and Czech stocks were still stronger on
the day at 1030 GMT, led by Prague's PX <>, but the gains had
softened on rising tension in the Middle East after the United
Nations approved military action in Libya.
The G7 intervention strengthened the euro, the main
reference currency for central Europe. However, moves in CEE
currencies have been relatively modest so far compared to swings
in global markets, and traders said they expected asset trade to
remain rangebound as currencies' exposure to Japan was fairly
small.
"The effects of intervention are fading away, which is why
we're seeing corrections from this morning," one trader in
Bucharest said. "But exposure is limited, which ... should put a
break on potential weakening."
The Polish zloty <EURPLN=> was 0.1 percent weaker on the
euro on the day at 1030 GMT, reversing early morning gains that
were supported by reheated expectations of a rate hike next
month. []
Dealers said they expected the zloty to trade in a wide
range of 4.0-4.10.
The Czech crown <EURCZK=> was down 1 percent, while the
Hungarian forint <EURHUF=> and Romanian leu <EURRON=> were flat.
Bond yields were roughly unchanged.
In Hungary, the currency showed little reaction to gross
average wages <HUWAGE=ECI> rising by an annual 1.6 percent in
January after a 4.6 percent drop in December. [].
Investors are waiting for the release of February rate
meeting minutes at 1300 GMT. Markets will focus on Budapest on
Monday when parliament could fill the remaining two vacant spots
on the central bank's rate-setting Monetary Council
[].
Analysts have closely followed the nomination process for
clues as to whether the ruling party would appoint economists
supportive of its pro-growth agenda, although they have said the
new Council was unlikely to embark on an easing campaign.
Czech markets were also looking ahead to a central bank rate
meeting next week where 19 of 20 analysts in a Reuters poll
forecast no change to record low interest rates. []
Markets have also mostly priced out the chance, but some
were suprised by a 20 basis point jump in the yield at a 13-week
treasury bill auction that had drawn weak demand. Some dealers
said this could raise chances of a rate hike. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.373 24.358 -0.06% +2.57%
Polish zloty <EURPLN=> 4.069 4.063 -0.15% -2.73%
Hungarian forint <EURHUF=> 273.4 273.6 +0.07% +1.68%
Croatian kuna <EURHRK=> 7.382 7.36 -0.3% -0.03%
Romanian leu <EURRON=> 4.166 4.168 +0.05% +1.61%
Serbian dinar <EURRSD=> 103.28 102.84 -0.43% +2.56%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR 0 basis points to 16bps over bmk*
7-yr T-bond CZ7YT=RR 0 basis points to +71bps over bmk*
10-yr T-bond CZ9YT=RR +1 basis points to +75bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -1 basis points to +496bps over bmk*
5-yr T-bond HU5YT=RR -2 basis points to +484bps over bmk*
10-yr T-bond HU10YT=RR 0 basis points to +424bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1155 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
For related news and prices, click on the codes in brackets: All
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(Reporting by Reuters bureaus; Writing by Luiza Ilie; Editing
by John Stonestreet/Ruth Pitchford)
