* Romania markets cautious on second short-term auction
* Czech, Polish 5-year bond auctions due at midday
PRAGUE, July 14 (Reuters) - Stronger stock markets and a
firming euro boosted emerging European currencies on Wednesday,
pushing the Hungarian forint to a three-week high.
The forint <EURHUF=> led gains with a 0.3 percent rise to
bid at 277.19 to the euro by 0713 GMT. The Polish zloty
<EURPLN=> added 0.1 percent and the Czech crown <EURCZK=> was
bid around Tuesday's domestic closing levels.
Markets got a lift from stocks in the region that rose up to
1.5 percent, led by Bucharest <>, after a good start to the
U.S. earnings season. []
The euro, central Europe's main reference currency, hovered
around a two-month high against the dollar on better risk
appetite.
"The positive sentiment on the zloty should continue and the
currency will probably follow euro/dollar moves," said one
Warsaw-based dealer.
Romania's leu <EURRON=> bid just off a one-week low, and
dealers said markets were focused on the possibility of the
finance ministry holding another short-term deposit auction to
try and plug its funding gap, which would hit the currency.
The ministry borrowed 1.1 billion lei on the money market on
Tuesday and could opt for a similar action if a fresh treasury
bill tender on Thursday is not successful. []
The end of interest rate easing cycles in the region and
growing financing needs have put upward pressure on yields,
putting new focus on debt auctions, particularly in IMF-aided
countries like Romania.
The Czechs, who must meet more than half of their record
borrowing needs this year in the second half, auction 5-year
paper on Wednesday and may sell more than the offer.
"As this is the first auction in a Q3 packed with bond
offerings, the paper today will probably go quite cheap,"
Komercni Banka traders said in a note.
In Poland, growing expectations of a rate hike this year
after a higher-than-expected inflation reading this week could
dampen demand at a 5-year bond tender. []
Danske Bank said despite some pricing in of hikes in Polish
rates and yields over the past few weeks, there was still space
for more price action.
"We see some value in being positioned for a further
pricing-in of rate hikes. This could also be supportive of the
Polish zloty, which could get some support if the markets start
to expect an imminent initiation of a tightening cycle," Danske
said.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.395 25.392 -0.01% +3.63%
Polish zloty <EURPLN=> 4.064 4.066 +0.05% +0.98%
Hungarian forint <EURHUF=> 277.19 277.92 +0.26% -2.47%
Croatian kuna <EURHRK=> 7.195 7.193 -0.03% +1.59%
Romanian leu <EURRON=> 4.258 4.256 -0.05% -0.48%
Serbian dinar <EURRSD=> 104.15 104.09 -0.06% -7.94%
All data taken from Reuters at 0913 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 John Stonestreet)
