BUDAPEST, Nov 30 (Reuters) - Markets in the European Union's
eastern members were mostly higher on Monday as Poland reported
stronger than expected growth in the third quarter of the year
while investors consolidated after Monday's sharp falls.
The euro zone debt crisis kept sentiment fragile, however,
and concerns over government policy and a conflict with the
central bank in Hungary weighed on the forint a day after a
surprise rise in interest rates.
Currencies were struggling to stay on the firmer side of key
technical levels, traders said.
Poland's gross domestic product (GDP) rose by 4.2 percent in
annual terms in the third quarter, more than analysts' 3.6
percent consensus forecast.
The zloty <EURPLN=> firmed slightly after the figures,
following Monday's falls.
The Polish currency strengthened 0.5 percent against the
euro to 4.077 by 0913 GMT, while Romania's leu <EURRON=> firmed
0.1 percent to 4.296.
Hungary's forint <EURHUF=D2> shed 0.3 percent after initial
gains and the Czech crown <EURCZK=> eased 0.1 percent to 24.862.
The region's stock markets were flat to firmer, led by the
Budapest Stock Exchange where the main equity index <>
firmed by 1 percent.
Hungary's central bank (NBH) surprised on Monday by lifting
its base rate by 25 basis points from a record low of 5.25
percent, the first central bank in the region since the 2008
global crisis to increase interest rates. []
Even though the bank indicated that further tightening may
come, a report that the government will press for a rise in the
bank's inflation target -- adding to plans for it to replace the
majority of rate setters next year -- added to concerns over
Hungary's policy path.
"Based on that, a weakening forint trend is in the cards,"
one Budapest-based currencu dcealer said.
"In the first round, 285 looks a technical support, then
288-290 from which the forint rebounded several times in the
past two years, while a move through 290 would be a significant
technical breakthrough," the dealer added.
The zloty -- investors' favourite in Central Europe in
recent months due to the Polish economy's strong growth --
rebounded after breaching technical levels at 4.0 and 4.1 in the
past week.
Central bank governor Marek Belka said the currency's
fluctuations were "not dramatic" and that it would return to its
appreciation trend after global market turbulence over Ireland's
fiscal woes ends. []
But dealers and analysts said concerns over the debt of
other euro zone members could maintain pressure on risk appetite
and assets in emerging markets including Poland despite
expectations for central bank rate hikes in Central Europe.
There are also worries that the Polish government has done
little other than rely on growth to bring down a budget deficit
set to reach almost 8 percent of GDP this year.
"Poland does not exactly stand out for its exemplary
national finances either... markets punish PLN additionally,"
Commerzbank said in a note on currency markets.
Dealers said the Czech crown could meet support around 24.95
to the euro after breaking the 24.890 level.
"We should hold around these levels for now," a Prague
dealer said. "There is a nasty bearish reversal on the monthly
chart on EUR/USD... so I reckon (the debt of euro zone member)
Portugal will be an issue in upcoming weeks and months."
In Romania, the finance ministry is expected to unveil debt
issuance plans for December later on Tuesday.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.862 24.819 -0.17% +5.86%
Polish zloty <EURPLN=> 4.077 4.096 +0.47% +0.66%
Hungarian forint <EURHUF=> 284.4 283.68 -0.25% -4.94%
Croatian kuna <EURHRK=> 7.426 7.43 +0.05% -1.57%
Romanian leu <EURRON=> 4.296 4.301 +0.12% -1.36%
Serbian dinar <EURRSD=> 107.21 107.09 -0.11% -10.57%
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 bureaux, writing by Marton Dunai;
editing by Patrick Graham)
