* Forint top gainer with 0.59 pct rise
* Czechs pick new finance minister, gridlock seen easing
* Polish cbanker still sees positive GDP growth in 2009
(Adds detail)
By Balazs Koranyi
BUDAPEST, May 5 (Reuters) - Central Europe's currencies were
mostly higher on Tuesday thanks to healthy global appetite for
risk, but dealers said recent sharp gains and concerns over
politics and growth would limit further upside for the region.
Hungary's forint <EURHUF=> was one of the day's biggest
movers with a 0.59 percent gain after the government passed tax
rises and pension cuts that are vital to keep a lid on its
budget deficit in a still deepening recession.
But dealers said the currency was quickly approaching a
major resistance level and its room to gain was limited.
"It broke through 285, which was pretty strong, but 282/283
looks tough and going under 280 looks out of the question for
now," a dealer said. "This is starting to look like a good level
to cash in on gains."
The Polish zloty <EURPLN=> lost ground in early trade as
London markets came back on line for the first time since the
European Commission predicted on Monday that the Polish economy
would contract this year -- in contrast to government forecasts.
But markets later shook off the bad news to turn around and
trade in positive territory.
"What is driving the market now is the rising risk appetite,
which we have seen in the last few days and which is clearly
reflected in stock gains," said one Warsaw-based dealer.
"Poland got a worse forecast than a few months ago but
everybody got their growth forecasts revised and relatively
speaking, Poland's still doing quite well compared to others."
The forint has firmed over 5.5 percent over the past seven
trading sessions on improved global risk appetite and an easing
of political risk after the country's new government began to
implement its programme.
Stocks also supported the forint and the Budapest bourse
<> led the region with a 1.6 percent gain, ahead of Prague's
<> 0.6 percent rise and Warsaw's <> 0.5 percent gain.
GRIDLOCK
There were signs of an easing in political gridlock in the
Czech Republic but dealers said that Tuesday's nomination of a
new finance minister did little to excite markets.
Ousted Czech Prime Minister Mirek Topolanek has suggested
budget expert Eduard Janota should head the Finance Ministry in
the latest attempt to end a crisis that has undermined the
country's stint as European Union presidents.[]
"It is good news but for markets it's not a significant
piece of news," said Miroslav Plojhar, EMEA economist at JP
Morgan in London.
"The spread of Czech bonds against swaps is linked to the
fact that the finance ministry, with or without Janota, must
issue much more debt than planned."
Romania's leu was also among the top gainers as it was
making up lost ground compared to peers.
"The leu is catching up with the region, which opened a bit
firmer because of a global stock market rally," one dealer said.
Dealers said there was no major impact from a formal
approval of a $17 billion stand-by loan for Romania to cushion
the effects of a sharp drop in capital inflows resulting from
the global financial crisis [].
Dealers added that local developments would likely remain on
the back burner for the next several sessions as the European
Central Bank prepared for a rate decision on Thursday and the
U.S. prepared to release key jobless figures on Friday.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.527 26.487 -0.15% +0.85%
Polish zloty <EURPLN=> 4.35 4.363 +0.3% -5.4%
Hungarian forint <EURHUF=> 283.63 285.3 +0.59% -7.08%
Croatian kuna <EURHRK=> 7.405 7.399 -0.08% -0.54%
Romanian leu <EURRON=> 4.159 4.18 +0.5% -3.48%
Serbian dinar <EURRSD=> 94.725 94.345 -0.4% -5.54%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +16 basis points to 181bps over bmk*
4-yr T-bond CZ4YT=RR +8 basis points to +205bps over bmk*
8-yr T-bond CZ8YT=RR +15 basis points to +294bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +5 basis points to +417bps over bmk*
5-yr T-bond PL5YT=RR +4 basis points to +341bps over bmk*
10-yr T-bond PL10YT=RR +1 basis points to +296bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -19 basis points to +860bps over bmk*
5-yr T-bond HU5YT=RR -56 basis points to +801bps over bmk*
10-yr T-bond HU10YT=RR -47 basis points to +701bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1040 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
(Reporting by Balazs Koranyi; editing by Patrick Graham)
