* Forint shakes off faster CPI, bonds steady
* Hungary rates seen lower, others on hold
(Adds bonds, background, updates prices)
PRAGUE, Dec 11 (Reuters) - Central European currencies were
buoyed by stock market gains on Friday, with Hungary's forint
holding firm after data showed annual inflation picked up in
November.
Hungary's central bank has cut interest rates by 300 basis
points since July to 6.5 percent to give a boost to the economy
after market turmoil stabilised in the spring and summer.
Minutes from the last meeting revealed there was still
strong support for more easing due to a benign inflation outlook
-- a market view little shaken by Friday's data showing a higher
than expected inflation rise. [] []
"In monetary policy I think the number certainly allows them
to keep cutting rates into January, however the key argument is
if inflation will fall to, or just below, target at the end of
the forecast horizon," said Nomura economist Peter Attard
Montalto.
"If today's surprise combines with more surprises into the
New Year on a slightly weaker currency (in our view), then I can
see the doves' wings -- those calling for larger cuts -- to be
clipped somewhat."
The forint <EURHUF=> bid 0.1 percent up at 272.7 to the euro
by 1051 GMT, while bonds moved sideways. The Polish zloty
<EURPLN=> led gains in the region with a 0.4 percent rise.
The Czech crown <EURCZK=> was down a touch at 25.74 to the
euro, while stock markets in the region rose around 1 percent,
lifted with global peers after China and U.S. economic data
underscored an economic recovery in the world. []
Central Europe's beaten-down economies have slowly moved
closer to recovery, data has showed in the past month, although
analysts warn rising unemployment and bulging state deficits
will drag on growth going ahead.
Strategists, though, forecast gains over the next year, led
by the zloty as Poland's economy, the only to have avoided
recession, outpaces peers.
RATE VIEW
Hungarian rate-setter Peter Bihari, the only vote for a
smaller, 25 basis point rate reduction last month, told Reuters
on Thursday that market expectations for interest rate cuts may
have gone too far, giving a boost to the forint. []
Hungarian and Romanian central banks have played catch up
with other central banks in the region by cutting interest rates
from some of Europe's highest levels. In contrast, Polish and
Czech rates have been cut since last year to record lows.
Romanian rates, though, are seen staying on hold until
political haggling in the country comes to end, and a new
government is formed that can put the country's IMF-led aid
package back on track. []
Romania's ten-week-old political crisis, seen prolonged by
last Sunday's presidential election outcome, has weighed on the
currency, with dealers saying the central bank has propped up
the leu in that time. []
The leu <EURRON=> was a tad weaker at 4.247 per euro on
Friday after inflation picked up last month. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.741 25.709 -0.12% +3.93%
Polish zloty <EURPLN=> 4.135 4.15 +0.36% -0.48%
Hungarian forint <EURHUF=> 272.74 273.01 +0.1% -3.37%
Croatian kuna <EURHRK=> 7.258 7.259 +0.01% +1.47%
Romanian leu <EURRON=> 4.247 4.24 -0.16% -5.48%
Serbian dinar <EURRSD=> 95.63 95.727 +0.1% -6.43%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -34 basis points to 77bps over bmk*
7-yr T-bond CZ7YT=RR -9 basis points to +91bps over bmk*
10-yr T-bond CZ10YT=RR -3 basis points to +81bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR 0 basis points to +384bps over bmk*
5-yr T-bond PL5YT=RR -1 basis points to +337bps over bmk*
10-yr T-bond PL10YT=RR -4 basis points to +299bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1152 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet; Editing
by Toby Chopra and Victoria Main)
