* Zloty top gainer, boosted by C/A data
* Region supported by better sentiment worldwide
* Romania sells 1.3 bln lei in t-bills, more than planned
(Adds Polish C/A data, prices)
By Sam Cage and Dagmara Leszkowicz
BUCHAREST/WARSAW, March 21 (Reuters) - The Polish zloty led
gains on Monday buoyed by better-than-expected current account
data, while improving appetite for riskier assets lifted other
currencies across the region, with Romania's leu hovering close
to its nine-month highs.
Data in Poland showed current account deficit narrowed to
0.93 billion euros in January from 1.57 bln euros reported in
December but market participants expect the gap to widen further
in the year as the economic recovery gathers momentum.
[]
"We expect the deficit to be bigger compared to 2010 as
domestic demand will back higher imports, mainly in
investments," said Maciej Reluga, chief economist at Bank
Zachodni WBK, adding that the data strengthened the zloty.
The Polish currency <EURPLN=> was some 0.8 percent stronger
to the euro by 1444 GMT.
Hungary's forint <EURHUF=> rose some 0.3 percent after the
country's ruling Fidesz party nominated two new members to the
central bank's Monetary Council who said they would fight
inflation, easing market concerns that the government would seek
hasty rate cuts. []
The nominations were based on government-sponsored legal
changes enacted earlier this year, which were criticised by the
European Central Bank (ECB) as they had stripped the governor of
the right to nominate two of the four policy makers.
"It looks like the complaints from the EU and the ECB
brought (Fidesz) back to their senses and they nominated rate
setters that are acceptable to markets," one Budapest-based
dealer said.
"The fact that the government will not go head-to-head with
the central bank could calm markets."
The central bank raised interest rates <NBHI> by 75 basis
points to 6 percent between November and January citing
inflation risks, but paused last month and analysts did not
expect the appointments to result in a change in interest rates.
On the bonds market, the Polish papers were relatively flat,
while Hungary's bonds extended their gains slightly, unfazed by
the nominees.
BETTER SENTIMENT
The Romanian leu <EURRON=> was some 0.3 percent stronger
against the euro and trading close to nine-month highs on
indications the recession-hit economy is slowly picking up and a
new loan deal with the International Monetary Fund due to be
rubber stamped on Friday.
Romania sold more than planned 1.3 billion lei in one-year
treasury bills on Monday with the average yield of the paper
some 5 basis points higher against the yield accepted at the
last tender on March 7. []
Elsewhere, the Czech crown <EURCZK=> edged some 0.1 percent
lower but were still close to the 24.400 level against the euro
it hovered around for much of last week.
The market is awaiting a central bank policy meeting on
Thursday but 19 of 20 analysts polled by Reuters expect no
change to record low rates and markets are not pricing in a
first rate hike until June. <CZKFRA> <>.
Stock markets rose across central Europe, led by Budapest
<> and Bucharest <> as investors picked up riskier
assets after power cables were connected to all six nuclear
reactors at the tsunami-damaged Fukushima Daiichi power plant,
raising hope that Japan can contain its nuclear crisis.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.452 24.426 -0.11% +2.24%
Polish zloty <EURPLN=> 4.036 4.067 +0.77% -1.93%
Hungarian forint <EURHUF=> 271.33 272.14 +0.3% +2.45%
Croatian kuna <EURHRK=> 7.371 7.377 +0.08% +0.12%
Romanian leu <EURRON=> 4.156 4.167 +0.26% +1.85%
Serbian dinar <EURRSD=> 102.91 103.01 +0.1% +2.93%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -10 basis points to 0bps over bmk*
7-yr T-bond CZ7YT=RR -7 basis points to +66bps over bmk*
10-yr T-bond CZ9YT=RR -3 basis points to +72bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -10 basis points to +328bps over bmk*
5-yr T-bond PL5YT=RR -7 basis points to +326bps over bmk*
10-yr T-bond PL10YT=RR -3 basis points to +306bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -10 basis points to +478bps over bmk*
5-yr T-bond HU5YT=RR -11 basis points to +462bps over bmk*
10-yr T-bond HU10YT=RR -17 basis points to +392bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1544 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
(Reporting by Reuters bureaus; Editing by Susan Fenton/Toby
Chopra)
