* Euro slide halted; manufacturing outlook better
* Hungarian bond yields fall, Polish debt sale strong
* Markets wary about pension reforms in region
* Czech rates unlikely to rise soon -cbankers
* Polish cbanker: zloty on appreciating trend
(Updates prices, adds Hungarian bonds, central bankers)
By Jason Hovet and Gergely Szakacs
PRAGUE/BUDAPEST, Dec 1 (Reuters) - Hungary's forint and
Poland's zloty rebounded on Wednesday, drawing strength from a
pause in the euro's slide as strong manufacturing data pointed
to a continued recovery in emerging Europe.
Poland's November Purchasing Managers' Index (PMI) rose to a
6-1/2 year high, a day after third quarter economic growth came
in better than forecast. The data added to arguments for the
central bank to start tightening policy. []
Czech PMI crept up and was among the strongest in the
region, but central bankers there said interest rates were
unlikely to rise anytime soon. [] []
Hungary's PMI, calculated under a different methodology,
also rose. []
The European Commission has forecast a steady recovery in
central Europe, which relies a lot on foreign trade, especially
with Germany, which is expected to lift the region's currencies
over the next year. [] <CEEFXPOLL01>
At 1427 GMT, the forint <EURHUF=> was 0.7 percent stronger,
while the zloty <EURPLN=> added 0.3 percent and hovered around
the key 4-per-euro level after a central bank policymaker said
the currency was on a firming trend. []
Hungarian government bond yields, which rose by up to 154
basis points scaling 15-month highs in November, fell by 15 to
25 basis points on Wednesday, tracking volatile changes of
sentiment in European markets.
Hungary will offer 40 billion forints of government debt
for sale on Thursday, which will be a key gauge of investor
sentiment towards the country, which has unnerved markets with a
string of unexpected policy moves over the past week.
"We already saw some buying interest and that's a good sign
before Thursday's auctions. This is still not enough relative to
the amount to be offered at the auction but it's difficult to
predict anything," a fixed income trader said.
PENSION CHANGES
Hungary's central bank, which caught most market watchers
off guard with Monday's rate rise, said a government plan to
scrap private pension funds would eliminate the key source of
stable domestic demand for government debt issues.
Markets were digesting signs that Poland could also
introduce significant pension reforms as part of efforts to rein
in public debt. []
The government may temporarily reduce the amount of cash it
transfers into private pension funds by partly substituting
government bonds, a senior government source told Reuters.
Analysts said this could hit equity markets by reducing
money available, while warning accounting tricks could unnerve
investors in the current environment. Poland is due to unveil
changes to its private pension funds during the next few weeks.
"The market is so sceptical of fiscal tricks that the Poles
could end up shooting themselves in the foot," said Nigel
Rendell, a strategist at RBC.
But demand for two-year Polish bonds held strong at an
auction on Wednesday as the average yield rose to 4.798 percent
from 4.595 percent in the previous equivalent sale in October.
[]
Budapest <> and Czech stocks <.PM> led regional gains,
adding over 3 percent, followed by Warsaw <> with a 2.3
percent rise.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.955 24.955 0% +5.46%
Polish zloty <EURPLN=> 4.009 4.022 +0.32% +2.37%
Hungarian forint <EURHUF=> 279.2 281.23 +0.73% -3.17%
Croatian kuna <EURHRK=> 7.423 7.423 0% -1.53%
Romanian leu <EURRON=> 4.295 4.296 +0.02% -1.34%
Serbian dinar <EURRSD=> 107.1 107.35 +0.23% -10.48%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +2 basis points to 95bps over bmk*
7-yr T-bond CZ7YT=RR -1 basis points to +83bps over bmk*
10-yr T-bond CZ10YT=RR -2 basis points to +112bps over
bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -20 basis points to +686bps over bmk*
5-yr T-bond HU5YT=RR -36 basis points to +631bps over bmk*
10-yr T-bond HU10YT=RR -31 basis points to +541bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1527 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
For related news and prices, click on the codes in brackets: All
emerging market news []
Spot FX rates
Eastern Europe spot FX <EEFX=> Middle East spot FX <MEFX=>
Asia spot FX <ASIAFX=> Latin America spot FX <LATAMFX=>
Other news and reports
World central bank news [] Economic Data Guide <ECONGUIDE>
Official rates [] Emerging Diary []
Top events [] Diaries [] Diaries Index []
(Reporting by Reuters bureaus, writing by Jason Hovet, editing
by Patrick Graham, John Stonestreet)
