* FX steady as market eyes further clues on Greek aid
* CEE industries in recovery, Czech PMI near record high
* Bonds mixed as markets eye Czech, Romanian rate decisions
* Hungary econ min sees setting euro target date by end-2011
(Adds rate cut expectations, Romania tender)
By Marton Dunai and Marius Zaharia
BUDAPEST/BUCHAREST, May 3 (Reuters) - Emerging European
currencies were steady on Monday, with investors waiting for
more details of an aid package addressing Greece's debt crisis,
which has already curbed rate cuts expectations in Romania.
European finance ministers agreed to a record 110 billion
euro ($147 billion) bailout for Greece on Sunday after the
country committed itself to austerity measures. []
Markets were unimpressed by the deal and doubts that Greece
can sustain the austerity steps weakened the euro further on
Monday.
Dealers say pressure remains on weakening side for central
European assets, one of the reasons the Romanian central bank is
seen slowing down its rate easing cycle to 25 basis points on
Tuesday, compared with previous moves of half-a-percent.
[]
"It is pointless to talk about a change in sentiment until
we see the money being disbursed and until we know for sure
Greece is saved," one dealer in Bucharest said.
In Czech Republic, which holds a rate-setting meeting on May
6, analysts expect the Greek crisis and an upcoming election to
keep the central bank in a wait-and-see mode. []
Some analysts say markets will remain volatile even if
Greece will be bailed out, and any hesitance from the government
in implementing austerity measures is likely to reignite
jitters.
"The problem markets face is the lack of a credible track
record, which will take time as Greece embarks on 2 years of
recession," Cheuvreux analysts said in a morning note.
At 1353 GMT, the Czech crown <EURCZK=> and the Romanian leu
<EURRON=> were flat compared to Friday's close, while the
Hungarian forint <EURHUF=> and the Polish zloty <EURPLN=> were a
touch stronger.
INDUSTRY FEELS BETTER
Purchasing managers' indexes rose in the Czech Republic and
dropped Hungary, but both remained above 50, indicating the
region's recession-hit industries were healing. []
The Czech reading improved to its fourth highest reading
ever, clearly signalling the Czech economy was back on track,
HSBC economist Kubilay Ozturk said.
"Nearly all sub-indices confirm that a wide scale recovery
is already underway," he said. "The undisrupted improvement in
employment is particularly encouraging."
Hungary's new economy minister said the country should be
able to set a target date to join the euro zone by the end of
2011, and the new government would maintain a strict fiscal
regime and strive to keep the forint stable [].
Markets were little moved. Hungarian bond yields ticked 3
basis points lower across the curve in very thin trading, while
Czech bonds were mixed as data showed the budget gap jumped at
the end of April to nearly half of the full-year target
[].
In Romania, the government sold less than planned at a
one-year T-bill tender and yields rose on pressure from Greece,
although levels remained below the benchmark interest rate.
[].
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.548 25.543 -0.02% +3.01%
Polish zloty <EURPLN=> 3.908 3.915 +0.18% +5.02%
Hungarian forint <EURHUF=> 267.87 267.97 +0.04% +0.93%
Croatian kuna <EURHRK=> 7.253 7.259 +0.08% +0.77%
Romanian leu <EURRON=> 4.126 4.127 +0.02% +2.7%
Serbian dinar <EURRSD=> 99.13 99.03 -0.1% -3.28%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -7 basis points to 91bps over bmk*
7-yr T-bond CZ7YT=RR -7 basis points to +74bps over bmk*
10-yr T-bond CZ10YT=RR -6 basis points to +97bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -6 basis points to +368bps over bmk*
5-yr T-bond PL5YT=RR +3 basis points to +312bps over bmk*
10-yr T-bond PL10YT=RR +4 basis points to +254bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -10 basis points to +435bps over bmk*
5-yr T-bond HU5YT=RR -6 basis points to +405bps over bmk*
10-yr T-bond HU10YT=RR -8 basis points to +350bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1653 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaux, writing by Marton Dunai and
Marius Zaharia; Editing by Neil Stempleman)
