* FX up on rising euro/dollar, mood still positive
* Output data, due Tuesday, may boost the zloty
* Concerns on Greek bonds may affect the region
(Adds fixed income, detail)
By Dagmara Leszkowicz
WARSAW, Nov 18 (Reuters) - Central Europe's currencies
firmed on Wednesday, with Hungary's forint again leading
regional gains for riskier emerging market assets driven largely
by euro strength against the dollar.
At 1156 GMT the forint <EURHUF=> had gained 0.2 percent to
265.5 against the euro, while Poland's zloty <EURPLN=> was 0.17
percent stronger against the common currency.
"The dollar level (to the euro) indicates risk appetite and
there's a simple correlation -- if the euro is rising today, I
expect currencies in the region to go up as well," said Tomasz
Niemiec, FX dealer at Millennium Bank in Warsaw.
Analysts said global risk was overshadowing domestic
factors, though Polish markets awaited output data this week.
"It seems tomorrow's industrial output data may be a signal
to strengthen the zloty," analysts at BRE bank in Warsaw wrote
in a note, saying the figures had potential to surprise on the
upside.
A Reuters poll forecast October industrial output data on
Thursday would show a 2.0 pct year-on-year fall but some
analysts well as officials said the output should be in a
positive territory already in the last two months of the year.
The region's currencies have strengthened this month behind
a weaker dollar reflecting appetite for emerging markets, along
with signs the region's economies are poised for recovery.
The Czech crown <EURCZK=> had led gains with a 4.4 percent
rise in November. The zloty and the forint are up some 3.7-3.8
percent during that time.
But the current positive outlook for the region could be
blurred by the recent widening of spreads between 'peripheral'
bonds in the euro zone and benchmark Bunds, BNP Paribas wrote in
a note.
Concerns centre on Greek bonds, due to Greece's weak fiscal
position, and on the eventual withdrawal of extra liquidity by
the European Central Bank. []
"Given the usual correlation with regional risk taking ...
it will eventually have spill over effects, particularly on the
forint," BNP Paribas said.
POLITICS, AUCTIONS
In Romania the leu <EURRON=> was stuck in the range it has
held since the government collapsed last month. Presidential
elections kick off on Sunday and are expected to move to a
runoff vote next month. []
The election is key as the next president's main task is to
form a government that could resume talks with the International
Monetary Fund, which has frozen its loan review.
Elsewhere, the Czech crown <EURCZK=> was a touch up against
the euro, while bonds weakened to correct some recent gains.
Dealers said markets were pricing out hopes of another rate
cut following a narrow vote to leave rates unchanged this month.
"The market is more or less not counting on a rate cut," a
fixed income dealer said. "There is still a chance... The main
factor will be the crown exchange rate."
The crown was trading around levels from the end of
September before the central bank chief Zdenek Tuma verbally
intervened against crown strength with talk of more easing.
[]
Polish bonds were broadly steady after the road bonds
tender, but the longer end weakened before the sale, with yields
rising some 2 basis points.
Hungary's papers were steady before a Thursday auction.
Hungary's debt agency (AKK) is also in discussion with
dealers about launching a switch auction for government bonds
next week, fixed income traders said on Wednesday. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.451 25.475 +0.09% +5.12%
Polish zloty <EURPLN=> 4.097 4.104 +0.17% +0.44%
Hungarian forint <EURHUF=> 265.48 266.05 +0.21% -0.73%
Croatian kuna <EURHRK=> 7.314 7.317 +0.04% +0.7%
Romanian leu <EURRON=> 4.279 4.29 +0.26% -6.18%
Serbian dinar <EURRSD=> 94.35 94.22 -0.14% -5.16%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +5 basis points to 116bps over bmk*
7-yr T-bond CZ7YT=RR +2 basis points to +116bps over bmk*
10-yr T-bond CZ10YT=RR -3 basis points to +97bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -2 basis points to +370bps over bmk*
5-yr T-bond PL5YT=RR 0 basis points to +325bps over bmk*
10-yr T-bond PL10YT=RR -1 basis points to +288bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR 0 basis points to +532bps over bmk*
5-yr T-bond HU5YT=RR 0 basis points to +463bps over bmk*
10-yr T-bond HU10YT=RR -1 basis points to +406bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1156 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, Writing by Dagmara Leszkowicz,
editing by Mike Peacock/Ruth Pitchford)
