* Currencies, stocks mixed, jittery
* Czech crown at 6-week high, bought for zloty
* Polish budget, rates under scrutiny after wage data
* Interest rate outlook considered in region
(Releads with crown jump, updates prices)
By Marius Zaharia and Sandor Peto
BUCHAREST/BUDAPEST, June 18 (Reuters) - Central European
currencies were mixed on Thursday, with the Czech crown jumping
to a six-week high to the euro, bought against the zloty.
The zloty was hit by 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 0.3 percent to the euro to 4.533
by 1500 GMT, while the Czech crown <EURCZK=> firmed 0.8 percent
to 26.44, a shade down from a six-week high at 26.395.
"It's a position squeeze," a Prague-based dealer said.
"Euro/forint is offered, euro/crown is offered, and euro/zloty
is well bid."
One Warsaw-based dealer said: "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."
Hungary's forint <EURHUF=> strengthened 0.5 percent to
280.65, regaining ground after early losses and Romania's leu
changed little, firming 0.1 percent to 4.221.
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 seen holding its rates 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 market factor as
this week's releases of indicators have fuelled expectations for
cuts 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 (the
leu) and its peers."
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.44 26.654 +0.81% +1.18%
Polish zloty <EURPLN=> 4.533 4.52 -0.29% -9.22%
Hungarian forint <EURHUF=> 280.65 282 +0.48% -6.09%
Croatian kuna <EURHRK=> 7.275 7.276 +0.01% +1.24%
Romanian leu <EURRON=> 4.221 4.226 +0.12% -4.89%
Serbian dinar <EURRSD=> 92.547 92.977 +0.46% -3.31%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -1 basis points to 133bps over bmk*
4-yr T-bond CZ4YT=RR +7 basis points to +158bps over bmk*
8-yr T-bond CZ8YT=RR +8 basis points to +281bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -3 basis points to +387bps over bmk*
5-yr T-bond PL5YT=RR -4 basis points to +323bps over bmk*
10-yr T-bond PL10YT=RR -8 basis points to +291bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -25 basis points to +843bps over bmk*
5-yr T-bond HU5YT=RR -62 basis points to +768bps over bmk*
10-yr T-bond HU10YT=RR -54 basis points to +687bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1700 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
For related news and prices, click on the codes in brackets:
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(Reporting by Reuters bureaus, writing by Marius Zaharia/Sandor
Peto, Editing by Andy Bruce/Victoria Main)
