* Zloty slips before CPI data, after 6-month highs last week
* Stocks weaker, Irish debt problems weigh on sentiment
* Currencies mostly fall as euro slips vs dollar
* Hungarian PM Orban to speak about budget, bonds drop
(Adds detail, new prices, bonds)
By Gergely Szakacs and Sandor Peto
BUDAPEST, Nov 15 (Reuters) - Poland's zloty retreated
against the euro on Monday ahead of key inflation data, while
concerns over Ireland's debt problems weighed on risk appetite
and sentiment in the European Union's emerging markets.
The dollar's advance against central Europe's reference
currency, the euro <EUR=>, was also negative, while the zloty
was weakened by technical factors after reaching six-month highs
last week.
In addition, investors are weighing up the chances that the
Polish central bank will become the first in the region to hike
interest rates from record lows.
At 1002 GMT, the zloty <EURPLN=> was down 0.5 percent
against the euro at 3.942, and the Czech crown <EURCZK=> -- the
region's top performer this year -- shed 0.2 percent. Hungary's
forint <EURHUF=> firmed slightly, while Romania's leu <EURRON=>
eased a touch.
"Euro/dollar is going down, the zloty is at 3.96 (to the
euro). The Irish problem is grave enough. It worsens the market
sentiment," said a currency dealer in Budapest.
The region's equity indices mostly fell, with Bucharest's
<> leading the loss with a 0.9 percent fall. Budapest's
<> rose 0.3 percent after deep losses in recent weeks due to
government plans to keep sectoral corporate taxes for years.
The forint <EURHUF=> stayed close to Friday's levels ahead
of a keynote speech by Prime Minister Viktor Orban in parliament
at 1200 GMT, when he will inform parliament about the details of
his government's 2011 budget.
Hungarian government bonds eased after Friday's rebound,
with the yield on 3-year benchmark paper rising 7 basis points
to 6.77 percent.
CENTRAL BANKS EYED
The zloty failed to hold below the 3.89 per euro resistance
level broken last week, and analysts at SEB said it may test
levels closer to 4.00 per euro in coming sessions.
Others added that inflation data due later in the day may
provide some support to the currency should price growth
surprise on the upside, lending ammunition to the hawks on the
central bank's rate-setting council.
"Today's data on developments of consumer prices in October
have the potential to refuel the debate about a rate hike at the
end of the month," Commerzbank said in a note.
Central bank governor Marek Belka said the improving growth
outlook could stoke inflation and lead to rate increases in the
medium-term, but further appreciation of the zloty will curb the
required scope of monetary tightening. []
Analysts expect annual price growth to have accelerated to
2.9 percent in October from 2.5 percent in September.
"Should the rate of inflation be worse than expected this is
likely to call the hawks back onto the scene providing a further
downward push in EUR-PLN," Commerzbank said in a note.
In Hungary, central bank Governor Andras Simor warned on
Sunday that the government's new taxes could fuel inflation and
that the bank would take the necessary measures if price growth
deviated from its 3 percent medium-term target.
In the Czech Republic, markets expect rates to be kept on
hold. Minutes from the last Czech central bank meeting showed
board member Eva Zamrazilova was the only one to vote for a rate
hike while the others backed no change. []
Romania's leu <EURRON=> was little changed within this
year's range of 4.2-4.3 per euro, with dealers saying there was
little scope to break out of that range in coming weeks.
Romania's finance ministry auctions 1 billion lei in 182-day
treasury bills later in the day.
"I think they will pay 7.1 percent. (The market) will ask
for higher yields," one Bucharest-based dealer said. "I think
they are moving (the 7 percent yield cap) higher."
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.623 24.575 -0.19% +6.88%
Polish zloty <EURPLN=> 3.942 3.924 -0.46% +4.11%
Hungarian forint <EURHUF=> 276.37 276.68 +0.11% -2.18%
Croatian kuna <EURHRK=> 7.391 7.38 -0.15% -1.11%
Romanian leu <EURRON=> 4.296 4.293 -0.07% -1.36%
Serbian dinar <EURRSD=> 107 107.07 +0.07% -10.39%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +5 basis points to +84bps over bmk*
7-yr T-bond CZ7YT=RR -2 basis points to +79bps over bmk*
10-yr T-bond CZ10YT=RR -1 basis points to +103bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -1 basis points to +377bps over bmk*
5-yr T-bond PL5YT=RR +3 basis points to +366bps over bmk*
10-yr T-bond PL10YT=RR -1 basis points to +318bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +7 basis points to +560bps over bmk*
5-yr T-bond HU5YT=RR +2 basis points to +538bps over bmk*
10-yr T-bond HU10YT=RR +7 basis points to +466bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1102 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaus, Writing by Gergely Szakacs;
Editing by Hugh Lawson)
