* Zloty, forint jump on EU crisis plan
* Hungary stocks jump the most since late-2008, yields fall
* IMF readies Romania aid tranche after cost cuts
(Adds Polish bonds, dealer quote, updates prices)
By Jason Hovet
PRAGUE, May 10 (Reuters) - The Polish zloty surged on Monday
and Hungarian stocks shot up 10 percent to lead central Europe's
rally after the European Union and IMF agreed a 750 billion euro
rescue package to contain the Greek debt crisis.
The package, the biggest since G20 leaders pooled cash after
the Lehman Brothers collapse stoked the financial crisis in
2008, was put in place over the weekend to greet markets on
Monday, sparking a surge but leaving longer-term questions for
the monetary union. []
Central European assets won back some losses suffered in the
past month due to fears Greece's debt woes would spread to other
indebted euro zone periphery states like Spain or Portugal.
But most dealers stayed cautious on the rally, warning the
market had the potential to reverse again after moves that sent
the zloty up at its fastest pace in more than a year and other
markets to their biggest intraday gains this year.
The zloty <EURPLN=> jumped as much as 4 percent before
falling back to bid 2.4 percent up from Friday at 4.03 to the
euro. The forint <EURHUF=> jumped 2 percent to 274.07 per euro
by 1058 GMT, and government bond yields fell around 50 basis
points, retracing about a third of last week's rise.
The Romanian leu <EURRON=> and Czech crown <EURCZK=>, which
have been steadier during market turmoil of the last month, rose
0.4 percent and 0.7 percent respectively. Dealers said the crown
lagged after a more than 1 percent gain late on Friday.
"I'm trying not to get too involved," a Prague currency
dealer said. "It used to be clear when the market was about the
market. But now if you have a lot of countries intervening, it's
getting hard to read things. Has anything really changed? No."
SHORT RELIEF
The size of the crisis deal, along with an unexpected pledge
from the European Central Bank to buy euro zone bonds if needed,
boosted confidence among investors who had shunned riskier
emerging market assets in the past week. []
Stock markets surged at their fast pace in month with
Budapest <> rising 10 percent in its biggest daily gain
since the financial crisis started.
Prague <> jumped the most this year with a 6.6 percent
rise and Warsaw <> gained 4.7 percent.
Central Europe, with better growth outlook and lower debt
piles than periphery countries, had gained sharply to start the
year when the Greece crisis first started bubbling, but came
under pressure when investors feared the crisis would spread.
"These measures reduce the risk of disorderly depreciations
of CE4 currencies, but do not create the foundations for renewed
appreciation trends," said Wood & Co economist Raffaella Tenconi.
"We reaffirm our view that the feeble eurozone growth
outlook and ongoing restructuring of domestic demands in the CE4
imply that further appreciation from current levels is
unwarranted."
While sluggish demand at home is seen to continuing weighing
on many of central Europe's economies, currencies are seen
gaining over the next 12 months of rising export demand. But
volatility is expected to stay high for now. []
In Romania, the IMF said the country's cost-cutting measures
may include the loss of 250,000 public sector jobs in the coming
years, a sign the government was pushing ahead with austerity
plans to meet its 20 billion euro EU/IMF package.
[]
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.636 25.73 +0.37% +2.66%
Polish zloty <EURPLN=> 4.027 4.123 +2.38% +1.91%
Hungarian forint <EURHUF=> 274.07 279.63 +2.03% -1.36%
Croatian kuna <EURHRK=> 7.261 7.264 +0.04% +0.66%
Romanian leu <EURRON=> 4.168 4.195 +0.65% +1.67%
Serbian dinar <EURRSD=> 99.92 99.89 -0.03% -4.04%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -12 basis points to 96bps over bmk*
7-yr T-bond CZ7YT=RR -21 basis points to +96bps over bmk*
10-yr T-bond CZ9YT=RR -20 basis points to +89bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -23 basis points to +388bps over bmk*
5-yr T-bond PL5YT=RR -26 basis points to +343bps over bmk*
10-yr T-bond PL10YT=RR -38 basis points to +270bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -61 basis points to +566bps over bmk*
5-yr T-bond HU5YT=RR -75 basis points to +483bps over bmk*
10-yr T-bond HU10YT=RR -75 basis points to +399bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1300 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet, editing
by Jason Webb, Ron Askew)
