(Adds fixed income, detail, byline)
By Dagmara Leszkowicz
WARSAW, Nov 25 (Reuters) - Emerging European currencies held
steady on Tuesday, finding some support from a rise in the
region's bourses, although dealers expected some pullback after
Monday's steep gains.
At 1011 GMT Hungary's forint <EURHUF=> was 0.1 percent up
against the euro to bid at 260.69, holding gains from Monday
when the central bank surprised with a rate cut. Earlier on
Tuesday it strengthened to just below 260.
Investors cheered the central bank's move to start scaling
back its emergency 300 basis point hike from October, when
Hungary's markets were pummelled due to concerns over the
country's banks.
"We made a big jump on Monday so I expect that we'll give
back some of those gains today," a Budapest-based dealer said.
"But looking at the optimism on core markets, I may be wrong and
the forint could hold on to most of the gains, though I don't
expect it (to stay) under 260."
Central European bourses opened mostly stronger, with Warsaw
WIG20 <>, Prague's PX <>, and Budapest's BUX <>
gaining around 2 percent, outperforming western peers.
Global stocks skyrocketed on Monday after news of a rescue
package to prevent the collapse of global banking giant
Citigroup <C.N>, and currencies had extended gains after
Hungary's 50 bps rate cut [].
Early on Tuesday Hungary's central bank Deputy Governor
Ferenc Karvalits said he could not rule out another rate cut
this year because of major improvements in the inflation
outlook, but said the bank would move with caution. []
In Poland investors await the central bank's Monetary Policy
Council (MPC) decision on interest rates due on Wednesday.
[].
Polish bonds strengthened Tuesday as investors priced in a
rate cut, while the zloty was a touch firmer than its Monday
close level at 3.84 per euro.
"It is clear investors expect rates to be cut. The sentiment
was also improved by the unexpected rate cut in Hungary," said a
dealer at a Warsaw-based bank.
Earlier in the day Poland's economy minister said the MPC
should cut interest rates to counter slowing growth.
[]
In other trade, the Czech crown <EURCZK=> and the Romanian
leu <EURRON=> were 0.2 percent down versus the common currency
in thin trade at 25.4 and 3.8 respectively.
A Moody's analyst on Monday forecast a recession in Romania
next year [], but dealers said the effect was offset
by a spike in money market rates at the beginning of a new
reserve period with the central bank.
Meanwhile, Serbia's dinar <EURRSD=> weakened further to fall
past 89.00 per euro, a new post-2000 low. Croatia's kuna
<EURHRK=> held steady but dealers said the currency may weaken.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 25.4 25.36 -0.16% +4.14%
Polish zloty <EURPLN=> 3.84 3.841 +0.03% -6.65%
Hungarian forint <EURHUF=> 260.69 260.84 +0.06% -3.1%
Croatian kuna <EURHRK=> 7.124 7.117 -0.1% +2.76%
Romanian leu <EURRON=> 3.799 3.792 -0.18% -6.11%
Serbian dinar <EURRSD=> 89.426 88.847 -0.65% -13.54%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -3 basis points to 164bps over bmk*
5-yr T-bond CZ5YT=RR +2 basis points to +147bps over bmk*
10-yr T-bond CZ9YT=RR +14 basis points to +98bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +1 basis points to +399bps over bmk*
5-yr T-bond PL5YT=RR -11 basis points to +335bps over bmk*
10-yr T-bond PL10YT=RR -6 basis points to +280bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -43 basis points to +1034bps over bmk*
5-yr T-bond HU5YT=RR -52 basis points to +973bps over bmk*
10-yr T-bond HU10YT=RR +10 basis points to +592bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1111 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
For related news and prices, click on the codes in brackets:
All emerging market news []
Spot FX rates Eastern Europe spot FX <EEFX=>
Middle East spot FX <MEFX=> Asia spot FX <ASIAFX=>
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World central bank news [] Economic Data Guide <ECONGUIDE>
Official rates [] Emerging Diary []
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(Reporting by Reuters bureaus, Writing by Dagmara
Leszkowicz; Editing by Ruth Pitchford)
