* Leu leads gains, helped by GDP data
* Romania c.bank may have sold euros via mkt, dealers say
* Fitch upgrade of Turkey rating supports region
(Adds fresh quotes, prices)
By Marton Dunai and Dagmara Leszkowicz
BUDAPEST/WARSAW, Dec 3 (Reuters) - Emerging Europe's
currencies extended gains on Thursday and Romania's leu hit
two-month highs after the country's gross domestic product
shrank less than expected in the third quarter.
Romania's data showed the economy contracted by 7.1 percent
in the July-September period, below a consensus forecast for a 9
percent annual fall. [].
Some dealers said the leu may also have received additional
support from the central bank selling euros for lei through
several major local banks.
Such a move, which the central bank declined to confirm,
would be aimed at reducing leu liquidity after the finance
ministry's euro-denominated issue on domestic markets last week,
they said.
"The central bank is selling euros," one Bucharest-based
dealer said. "The move comes to sterilise the lei thrown into
the market by the finance ministry after its eurobond issue."
"This has triggered some stop losses on the way as well and
this boosted the (leu's) move."
At 1457 the leu <EURRON=> was 0.7 percent stronger to the
euro, its highest level since Sept. 30.
Romania sold 1.42 billion euros in 1-year euro-denominated
treasury bills on the domestic market last week. []
That was the ministry's third hard currency paper issue on
the domestic market this year, bringing the total borrowed to
roughly 2.6 billion euros.
On the domestic front, the ministry has sold over 60 billion
lei so far this year, five times more than in 2008.
"Usually, after the finance ministry sells paper in euros,
after it turns the sum into lei, the central bank steps in and
cleans up the extra leu liquidity in the market," another dealer
said. "It has happened before."
TURKEY, TRICHET SUPPORTS
Other currencies were also slightly up, though off their day
highs. Dealers said Turkey's rating upgrade by Fitch to 'BB+'
from 'BB-' was a positive sign for the whole region.
The Czech crown <EURCZK=> strengthened 0.5 percent against
the euro, while Hungary's forint <EURHUF=> and Poland's zloty
<EURPLN=> both firmed by 0.3 percent.
"The (Turkey) rating upgrade was definitely supportive for
central and eastern Europe," said one Warsaw-based dealer.
Some dealers said Thursday's comments by the head of the
ECB, Jean-Claude Trichet, in praise of Poland's economic
resilience during the global crisis had lent support to the
zloty [].
Elsewhere, Hungarian bond yields were a touch lower across
the curve after a bond auction, with dealers saying the market
saw more steepening ahead as further rate cuts should give
support to short-dated papers.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.754 25.89 +0.53% +3.88%
Polish zloty <EURPLN=> 4.095 4.107 +0.29% +0.49%
Hungarian forint <EURHUF=> 269.52 270.3 +0.29% -2.22%
Croatian kuna <EURHRK=> 7.31 7.304 -0.08% +0.75%
Romanian leu <EURRON=> 4.206 4.235 +0.69% -4.56%
Serbian dinar <EURRSD=> 95.594 95.44 -0.16% -6.4%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -4 basis points to 100bps over bmk*
7-yr T-bond CZ7YT=RR +4 basis points to +106bps over bmk*
10-yr T-bond CZ10YT=RR -2 basis points to +91bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -4 basis points to +357bps over bmk*
5-yr T-bond PL5YT=RR -5 basis points to +334bps over bmk*
10-yr T-bond PL10YT=RR -2 basis points to +295bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -4 basis points to +527bps over bmk*
5-yr T-bond HU5YT=RR -5 basis points to +483bps over bmk*
10-yr T-bond HU10YT=RR -3 basis points to +425bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1457 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Marton Dunai and
Dagmara Leszkowicz; editing by Patrick Graham)
((marton.dunai@reuters.com; +36 1 327 4742; Reuters Messaging:
marton.dunai.reuters.com@reuters.net))
