* Rate hike calls help PLN firm beyond "intervention level"
* Market awaits bonds tender in Portugal due 1045 GMT
* Czechs offer 8-yr papers, Poland 10- and 20- year bonds
(Adds fixed income, detail)
By Dagmara Leszkowicz
WARSAW, Jan 12 (Reuters) - The Polish zloty breached the
level of around 3.85 against the euro where the central bank has
previously stepped in to cool its gains, while other emerging
European currencies were a touch stronger as better overall
sentiment boosted appetite for riskier assets.
The zloty <EURPLN=> has gained more than 3 percent versus
the euro since the start of 2011 as a batch of monetary
policymakers, including central bank Governor Marek Belka,
called for a quick start to a cycle of interest rate rises.
Andrzej Bratkowski, a long-time supporter of rate rises on
the 10-strong Monetary Policy Council (MPC), said on Tuesday a
rate rise should come this month and that the bank could raise
rates by a total of up to 150 basis points in this cycle. The
MPC holds its next meeting on Jan. 18-19. []
His fellow policymaker, Jan Winiecki, told TVN CNBC on
Wednesday Poland's inflation was rising and this should be
reflected in the decisions of the MPC. []
"The market is bullish on the comments on interest rate
increases and we see lots of foreign investors entering the
market," said one Warsaw-based dealer.
The dealer added that he did not expect the central bank to
intervene on the FX market, despite the fact that the currency
is below the level of 3.85 at which an intervention took place
last April.
Then, the bank surprised markets with its first and so far
only bout of buying since introducing a free float in 2000 as it
tried to limit the impact of the currency's surge on exports and
the wider economy.
By 1007 GMT on Wednesday, the zloty was some 0.3 percent
stronger against the euro. Hungary's forint <EURHUF=> and
Romania's leu <EURRON=> each gained some 0.2 percent, while the
Czech crown <EURCZK=> was flat.
The Czech unit has gained some 2.3 percent against the euro
since the beginning of the year and analysts say the crown has
benefited from a string of improving economic and fiscal data
this year.
"We passed the 24.500 level, which was crucial," CSOB dealer
David Sykora said.
"We won't see a massive correction. People I'm speaking
with, not just locals but banks in London and from abroad, are
positive on the crown."
In Hungary one of the central bank's policymakers said the
bank should raise its key interest rate once more but not
necessarily in January. []
Hungary hiked interest rates by half a percentage point in
two moves late last year. Analysts expect Poland to move next.
The Czech Republic is not expected to begin tightening
monetary policy until mid-2011, though a member of the Czech
central bank's board, Pavel Rezabek, said the latest inflation
data showed a policy reaction may come sooner than bank
forecasts. []
PORTUGESE AUCTION KEY
Hungary's bonds were stronger across the curve in illiquid
trade on Wednesday, with investors focused on a Portugese debt
auction due at 1045 GMT.
"If the Portuguese paper isn't bought that could trigger a
wave of euro bond selling here too," said one Budapest-based
dealer.
In Poland, the bond market was stable and dealers said they
expected a planned Polish auction on Wednesday to be successful,
though prices of the offered 10-year and 20-year bonds may be
lower than at previous tenders due to the overall situation on
the debt market.
"The long end of the curve has moved somewhat in the past
days so I expect there will be appetite to buy papers with
yields at around 6.20.6.23," said one fixed-income dealer.
Poland will offer up to 2.5 billion zlotys in bonds, with
the results expected at 1100 GMT.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.426 24.42 -0.02% +2.35%
Polish zloty <EURPLN=> 3.84 3.85 +0.26% +3.07%
Hungarian forint <EURHUF=> 275.98 276.63 +0.24% +0.72%
Croatian kuna <EURHRK=> 7.398 7.403 +0.07% -0.24%
Romanian leu <EURRON=> 4.249 4.257 +0.19% -0.38%
Serbian dinar <EURRSD=> 105.37 106.04 +0.64% +0.53%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -4 basis points to 78bps over bmk*
7-yr T-bond CZ7YT=RR +7 basis points to +95bps over bmk*
10-yr T-bond CZ9YT=RR -10 basis points to +90bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -2 basis points to +403bps over bmk*
5-yr T-bond PL5YT=RR -6 basis points to +374bps over bmk*
10-yr T-bond PL10YT=RR -3 basis points to +327bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -14 basis points to +646bps over bmk*
5-yr T-bond HU5YT=RR -11 basis points to +593bps over bmk*
10-yr T-bond HU10YT=RR -17 basis points to +502bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1107 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaus, Writing by Dagmara Leszkowicz;
editing by Stephen Nisbet)
