* Currencies, bonds stabilise after this week's falls
* Czech final Q3 GDP, inflation support flat rates
* Hungary Q3 GDP and Oct trade surplus beat estimates
(adds fixed income, detail)
By Marius Zaharia
BUCHAREST, Dec 9 (Reuters) - Emerging Europe's currencies
stabilised on Wednesday, after big losses earlier this week, as
data beat expectations in Hungary and supported views that
interest rates would remain unchanged in the Czech Republic.
Czech final third-quarter data showed the economy fell 4.1
percent on the year [], in line with estimates,
while November annual inflation stood at 0.5 percent, a touch
higher than forecast [].
"The breakdown confirms that household spending and general
consumption performed quite well," said Raffaella Tenconi of
Wood&Co in Prague. "Inflation ... came out higher than I
expected. It does argue that probably rates will remain
unchanged in the near term."
Central bank board member Eva Zamrazilova told Reuters
[] her vote on rates next week would largely depend
on Wednesday's data. She said signs of increasing inflationary
pressure or higher than expected consumer demand would support
keeping rates at 1.25 percent.
Meanwhile, Vice-Governor Mojmir Hampl said he saw no reason
to change his vote for stable interest rates at the next policy
meeting. []
At 0959 GMT, the Czech crown <EURCZK=> and the Hungarian
forint <EURHUF=> were 0.1 percent weaker, while the Polish zloty
<EURPLN=> was a touch stronger.
In Hungary, final GDP data showed the economy contracting by
7.1 percent on the year in July through September, an inch less
than in a preliminary estimate [], while foreign
trade data for October showed a surplus of 464 million euros,
well above expectations [].
Data follows Tuesday's figures showing October industrial
output grew on the month for the second time [].
Recent data in central Europe have encouraged some investors
to believe a recovery may be under way, but disappointing
industrial data in key trade partner Germany on Tuesday and
fiscal concerns in Greece raised concerns about its trajectory.
[]
POLITICAL RISK
Romania's leu <EURRON=> has held steady this week, following
a hotly-contested presidential race won by incumbent Traian
Basescu by a razor-thin margin, a result challenged by the
opposition. []
Basescu's prime minister appointees gave had trouble gaining
parliamentary support for a new government that can resume talks
with the International Monetary Fund, that has put its aid deal
on hold due to a political crisis that sparked in October.
Investors are worried several elections across the region
next year could endanger international aid deals and delay
structural reforms, complicating recovery and heightening risk
of sell-off in emerging European assets [].
On Tuesday, Romanian central bank's chief economist said it
was wise to curb appreciation of the leu, even though the
currency was already perceived as weak because it could help
exports [].
But dealers suspected covert central bank interventions to
support the unit this week.
Debt markets were also stable ahead of a Polish road bonds
tender at 1100 GMT. Poland's state-owned BGK bank will offer
1.3-1.8 billion zlotys in government-backed bonds maturing in
2018 and with a fixed coupon of 6.25 percent.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.728 25.698 -0.12% +3.98%
Polish zloty <EURPLN=> 4.124 4.126 +0.05% -0.22%
Hungarian forint <EURHUF=> 273.73 273.35 -0.14% -3.72%
Romanian leu <EURRON=> 4.236 4.233 -0.07% -5.23%
Serbian dinar <EURRSD=> 95.13 95.22 +0.09% -5.94%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +27 basis points to 121bps over bmk*
7-yr T-bond CZ7YT=RR +7 basis points to +103bps over bmk*
10-yr T-bond CZ10YT=RR 0 basis points to +88bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +1 basis points to +387bps over bmk*
5-yr T-bond PL5YT=RR +1 basis points to +345bps over bmk*
10-yr T-bond PL10YT=RR 0 basis points to +307bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +1 basis points to +547bps over bmk*
5-yr T-bond HU5YT=RR -1 basis points to +505bps over bmk*
10-yr T-bond HU10YT=RR +1 basis points to +443bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1159 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, Writing by Marius Zaharia;
Editing by Mike Peacock; Editing by Victoria Main)
