* Stocks, euro boost currencies, but resistance near
* Polish cbank minutes awaited, bonds stay firmer
* Hungary reform plan still key, forint seen stuck for now
By Jason Hovet
PRAGUE, Feb 17 (Reuters) - Central European currencies held
firmer on Thursday, helped by rising stock markets and a
stronger euro, but neared resistance levels that dealers said
were likely to put a cap on gains for now.
The Hungarian forint <EURHUF=> led, rising 0.2 percent to
269.71 to the euro by 1054 GMT. A dealer said the level of 269
would put a stop to gains as it did last autumn, after a rise of
1.2 percent this month.
But markets were still focused on any details of the
Hungarian government's reform plans, due to be unveiled next
month. Expectations the plan will lead to a sustainable fiscal
path have buoyed the forint this year.
In Poland, rising bets that the central bank's Monetary
Policy Council will increase interest rates by another quarter
point at a March meeting have lifted the zloty <EURPLN=>, and
analysts expected a test of the 3.90 per euro level.
The zloty, up 1 percent in the past two sessions, was bid at
3.903 to the euro, up 0.1 percent. Polish bonds, supported by
the zloty, firmed a second day in a row after a Monday slide
when higher inflation data raised expectations of a rate hike.
Dealers said markets were waiting for a 1300 GMT release of
the minutes from the MPC's sitting in January when it raised
rates to 3.75 percent from an all-time low of 3.5 percent.
"(Bonds rose) thanks to better sentiment (sparked) by
stronger zloty and the fact that the German bunds are now at
strong levels for two days now," a Warsaw trader said.
The Czech crown <EURCZK=> was steady at 24.321, and the
Romanian leu <EURRON=> hovered on the strong side of 4.25 to the
euro, a level it broke in the previous session. Dealers said it
was likely to stick in the 4.24/25 range.
"Stocks have gained, the euro firmed, supporting the
region," a Bucharest dealer said. "Volumes have risen somewhat
this morning, mirroring the region, so it would be tricky for
the leu to firm further."
HUNGARY WATCH
Hungary's forint leads central European currencies this
year. But it has begun to drift as markets increasingly bet the
central bank has finished monetary policy tightening for now,
and have been disappointed by a delay in the government reform
plan.
Hungary's debt management agency and news reports indicated
on Wednesday that the country may have an uphill struggle in
2011 trying to keep its structural deficit below the EU's 3
percent limit, which also weighed on the market. []
"If reform steps would disappoint investors, a bad track
record is anticipated to add to concerns over Hungary's
outlook," Equilor Investments said in a note.
"Hence, it is rather a risk which is not priced in, but
could disappear depending on the government's intentions."
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.321 24.326 +0.02% +2.79%
Polish zloty <EURPLN=> 3.907 3.906 -0.03% +1.31%
Hungarian forint <EURHUF=> 269.71 270.3 +0.22% +3.07%
Croatian kuna <EURHRK=> 7.407 7.405 -0.03% -0.36%
Romanian leu <EURRON=> 4.248 4.247 -0.02% -0.35%
Serbian dinar <EURRSD=> 103.47 103.62 +0.14% +2.37%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -10 basis points to 40bps over bmk*
7-yr T-bond CZ7YT=RR -7 basis points to +80bps over bmk*
10-yr T-bond CZ9YT=RR -6 basis points to +85bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -2 basis points to +372bps over bmk*
5-yr T-bond PL5YT=RR -2 basis points to +341bps over bmk*
10-yr T-bond PL10YT=RR -3 basis points to +303bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -2 basis points to +518bps over bmk*
5-yr T-bond HU5YT=RR -3 basis points to +479bps over bmk*
10-yr T-bond HU10YT=RR -3 basis points to +421bps 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 1700 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet, editing
by Catherine Evans/Toby Chopra)
