* Currencies, stocks mixed, jittery
* Polish budget, rates under scrutiny after wage data
* Interest rate outlook considered in region
(Recasts, adds new comments, updates prices)
By Marius Zaharia and Sandor Peto
BUCHAREST/BUDAPEST, June 18 (Reuters) - Central European
currencies were mixed on Thursday, with the zloty falling due to
concerns over the Polish budget and wage data which provided
argument for a central bank interest rate cut.
Dealers said continued uncertainty over the global appetite
for riskier emerging market assets and domestic economic
concerns would keep the region's currency markets jittery.
The zloty <EURPLN=> eased 0.6 percent against the euro to
4.548 by 1302 GMT, while the Czech crown <EURCZK=> rallied 0.9
percent to a six-week high of 26.427 to the euro by 1423 GMT.
"The market is very illiquid today and the zloty weakened
for a while, exceeding 4.55 due to some cross plays on the
Polish currency and the Czech crown," one Warsaw-based dealer
said.
Hungary's forint <EURHUF=> was flat at 282.08, regaining
ground after early losses and Romania's leu also changed little,
trading at around 4.224.
Polish corporate sector wages rose by 3.8 percent in annual
terms in May, after 4.8 percent growth in April, triggering
concern that domestic consumption will provide the economy with
less defence against the global crisis.[]
"This is an argument for cutting the (central bank interest
rates)... In our view a cut is possible at the June setting,"
said ING Bank Slaski senior economist Rafal Benecki.
While the prospect of more rate cuts weigh on the currency,
the figures add to signs that economic slowdown will also lead
to a higher budget deficit. Polish bonds weakened at the long
end of the curve.
"The market is certain budget deficit will be increased,"
said Piotr Zoltowski, dealer at BPH bank in Warsaw.
Other states in the region which are more reliant on exports
than Poland have been hit even harder by the crisis, like
Hungary which is also amid harsh state spending cuts to keep its
budget in balance and cut reliance on international aid.
But Hungary's central bank is expected to keep its interest
rates on hold at its next meeting according to a Reuters poll of
analysts. [] It also showed that the government is
likely to meet its budget deficit targets <HUDEF1>
[].
Despite the forint's early fall, Hungarian government bonds
were flat after auctions and a top-up sale where 21 billion
forints worth of bonds were sold, 6 billion more than planned.
The sale and the cancellation of an auction of repurchasing
short-term bonds on Wednesday shows that the bond market, frozen
for months before April, was consolidating, but traders said
Hungary would rely on a foreign aid at least for several months.
The interest rate outlook can remain a key factor in the
region's markets as this week's releases of indicators have
underpinned expectations for more monetary easing starting next
week in Poland, Romania and even Czech Republic, where rates
stand as low as 1.5 percent, dealers said.
"Emerging Europe's currencies seem to be under
the influence of next week's central bank announcements,"
Piraeus Bank said in an afternoon note.
"As the high interest rates are the main determinant of
foreigners' interest in emerging European currencies, a
diminishing differential is denting the appetite for RON and its
peers."
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.495 26.654 +0.6% +0.97%
Polish zloty <EURPLN=> 4.548 4.52 -0.62% -9.52%
Hungarian forint <EURHUF=> 282.08 282 -0.03% -6.57%
Croatian kuna <EURHRK=> 7.28 7.276 -0.05% +1.17%
Romanian leu <EURRON=> 4.224 4.226 +0.05% -4.96%
Serbian dinar <EURRSD=> 92.6 92.977 +0.41% -3.37%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -1 basis points to 134bps over bmk*
4-yr T-bond CZ4YT=RR +6 basis points to +158bps over bmk*
8-yr T-bond CZ8YT=RR +10 basis points to +282bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -2 basis points to +388bps over bmk*
5-yr T-bond PL5YT=RR -2 basis points to +325bps over bmk*
10-yr T-bond PL10YT=RR -6 basis points to +293bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -24 basis points to +844bps over bmk*
5-yr T-bond HU5YT=RR -60 basis points to +770bps over bmk*
10-yr T-bond HU10YT=RR -52 basis points to +689bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1539 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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emerging market news []
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(Reporting by Reuters bureaus, writing by Marius Zaharia/Sandor
Peto, Editing by Andy Bruce)
