* Zloty leads currency gains as Komorowski elected
* Leu firms after IMF grants funds to Romania
* Stocks mixed, sentiment still fragile
(Adds bonds, new prices, comment)
BUDAPEST, July 5 (Reuters) - Poland's zloty led gains among
Central European currencies on Monday after a tight presidential
election victory for moderate conservative Bronislaw Komorowski
raised expectations of further economic reforms.
At 1005 GMT, the zloty <EURPLN=> was 0.8 percent stronger
versus the euro, bringing it close to erasing its losses for the
year so far and lifting currencies across the region.
The leu <EURRON=> followed with a 0.7 percent rise, gaining
steadily through the morning after the International Monetary
Fund late on Friday approved fresh funds to Romania under a 20
billion euro financing agreement. []
The forint <EURHUF=> firmed 0.2 percent.
With new pledges last week from Hungary's government to
achieve its 2010 budget deficit target, several local factors
pointed to gains for regional assets, though international
investor sentiment remained fragile. []
"(Hungary's) commitment to keep to the deficit target and a
favourable external balance are supporting the forint, but the
international situation still carries significant risk,"
Hungary's MKB Bank said in a daily note.
Uncertainty over budget policy has weighed heavily on the
financial markets of Romania and Hungary -- states which have
been aided by the IMF and the EU -- in the past two months.
The forint has shed over 5 percent against the euro this
year and the zloty and the leu half a percent, while the Czech
crown <EURCZK=> has firmed almost 3 percent.
Stocks in the region were mixed, with Budapest's index
<> firming 0.3 percent and Bucharest <> rising 0.1
percent, while Warsaw <> shed 0.4 percent.
Czech markets are closed on Monday and Tuesday due to public
holidays.
P0LISH HOPES
Hungarian government bonds were mixed, while Polish bonds
firmed slightly, driven by the zloty's gains.
"Komorowski's victory is a slight positive sign for the
market," said one Warsaw-based dealer. "Additionally, risk
aversion eased and this all translated into a stronger zloty."
Because Komorowski is a member of the prime minister's
ruling Civic Platform (PO), the government no longer has to
worry about the risk of presidential vetoes of its legislation
and should be freer to pursue economic reforms. []
"Expectations will be that the government will now crack the
whip on fiscal/structural reforms, which had proven difficult
under the cohabitation between the outgoing Justice and Law
(PiS) presidency and the PO-led government," analyst Timothy Ash
at RBS said in a note.
Dealers said news of the $1.115 billion IMF disbursement to
Romania boosted the leu <EURRON=> and helped drive regional
gains.
"The release of IMF/EC funding will have significantly
improved the government's cash position, easing concern over its
liquidity position," said RBS's Ash.
"It will also have opened the way for the (finance ministry)
to seek additional market funding over the next few weeks."
But the fresh payment may also fuel higher prices. It is
being part-funded by a VAT hike, which an IMF official was
quoted as saying had prompted the fund to raise its 2010
inflation forecast to 7.9 percent from 3.5 percent.
[]
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.626 25.69 +0.25% +2.7%
Polish zloty <EURPLN=> 4.115 4.152 +0.9% -0.27%
Hungarian forint <EURHUF=> 284.93 285.5 +0.2% -5.12%
Croatian kuna <EURHRK=> 7.191 7.196 +0.07% +1.64%
Romanian leu <EURRON=> 4.262 4.289 +0.63% -0.58%
Serbian dinar <EURRSD=> 104.19 104.18 -0.01% -7.98%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -4 basis points to 94bps over bmk*
7-yr T-bond CZ7YT=RR +1 basis points to +142bps over bmk*
10-yr T-bond CZ9YT=RR +6 basis points to +135bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +1 basis points to +413bps over bmk*
5-yr T-bond PL5YT=RR -4 basis points to +383bps over bmk*
10-yr T-bond PL10YT=RR -2 basis points to +333bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +5 basis points to +624bps over bmk*
5-yr T-bond HU5YT=RR -4 basis points to +589bps over bmk*
10-yr T-bond HU10YT=RR +2 basis points to +500bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1107 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Gergely
Szakacs/Sandor Peto; editing by Mike Peacock, John Stonestreet)
