* FX up, Hungarian forint extends gains
* Polish zloty leads regional gains on Moody's rtg comments
* Keenly awaited Hungarian reform plan due on Tuesday
By Radu Marinas
BUCHAREST, Feb 25 (Reuters) - Emerging European currencies
bounced back on Friday, lifted by rising equities and investor
hopes the world can weather the volatility in oil prices, while
the forint extended gains ahead of Hungary's much-awaited fiscal
reform plan.
European equities opened higher on Friday, after losses
this week, on hopes a recent surge in oil prices may have been
overdone, though traders said the situation was still too fluid
to take any aggressive bets and oil prices headed higher again.
"European and Asian stocks opened higher to provide brief
support but uncertainty over Libya still weighs," said one
dealer in Bucharest."
Analysts said the Polish zloty <EURPLN=> was supported by
comments from ratings agency Moody's that Poland's A2 rating was
safe until national elections due in October. []
"Poland is one of the first countries to tighten monetary
policy ... we think at the moment the policy framework, the
institutional framework is credible," Anthony Thomas, Moody's
chief analyst for Poland, told Reuters in an interview.
However, the zloty could remain under pressure after briefly
dipping through a key psychological level of 4.0 against the
euro on fading expectations of a quick rate hike.
"Since the resumption of a tightening cycle is in the air,
the room for prospective losses should be limited," KBC said in
a note.
By 1115 GMT, the zloty had firmed 0.5 percent and the forint
<EURHUF=> was up 0.3 percent, while the Czech crown <EURCZK=>
was 0.1 percent stronger with yields for the 10-year Czech bonds
easing 2 basis points.
The Romanian leu <EURRON=> strengthened to a six-month high
versus the euro, up 0.4 percent on the day to bid at 4.2130.
In Hungary, the forint was boosted after the government said
it would discuss a much-awaited structural reform plan on
Saturday and announce the plan on Tuesday. []
Dealers said that news also helped push down bond yields after
auctions were heavily subscribed on Thursday. []
"Forint long positions could be considered for those only
who are expecting a large-scale spending reduction package from
the government next Tuesday, which would generate significant
new inflows into the country," KBC said.
Within the region the Czech crown is seen outperforming its
peers if global sentiment becomes more risk-averse as the
currency is traditionally seen as the region's safe haven,
analysts say.
"Furthermore, the correction due after the (crown's) swift
appreciation at the beginning of the year against EUR has
happened already," Societe Generale said in a weekly emerging
markets report.
The crown has lost 2.3 percent since hitting a 27-month high
at the beginning of February, but has still gained 2 percent
since the start of the year.
"We stick to our short-term target of 24.71 and believe
the koruna should stay in a defensive mode even if the risk
attitude may somewhat improve during Friday," said KBC.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.473 24.493 +0.08% +2.15%
Polish zloty <EURPLN=> 3.97 3.99 +0.5% -0.3%
Hungarian forint <EURHUF=> 272.65 273.55 +0.33% +1.95%
Croatian kuna <EURHRK=> 7.424 7.419 -0.07% -0.59%
Romanian leu <EURRON=> 4.213 4.23 +0.4% +0.47%
Serbian dinar <EURRSD=> 103.2 103.05 -0.15% +2.64%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +1 basis points to 25bps over bmk*
7-yr T-bond CZ7YT=RR -2 basis points to +88bps over bmk*
10-yr T-bond CZ9YT=RR -2 basis points to +87bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +4 basis points to +355bps over bmk*
5-yr T-bond PL5YT=RR +3 basis points to +349bps over bmk*
10-yr T-bond PL10YT=RR +1 basis points to +313bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -1 basis points to +435bps over bmk*
5-yr T-bond HU5YT=RR -1 basis points to +432bps over bmk*
10-yr T-bond HU10YT=RR -3 basis points to +403bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1206 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
For related news and prices, click on the codes in brackets: All
emerging market news []
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(Reporting by Reuters bureaux, writing by Radu Marinas; Editing
by Susan Fenton)
