* FX, stocks firm on bullish global mood, crown keeps gains
* Hungarian yields fall further on rate cut hopes
(Adds more details, bonds)
By Krisztina Than
BUDAPEST, Sept 16 (Reuters) - Eastern Europe's currencies
and stocks rose on Wednesday with Hungary's forint firming the
most, while the Czech crown held onto its gains and continued to
shrug off news of a delay in elections until 2010.
Dealers said there was room for further rises in the
region's currencies after Asian stocks rallied on upbeat U.S.
economic news, the dollar slipped and Europe's stock markets
also surged. Eastern European bourses also rallied with
Budapest<> up 2.9 percent and Warsaw 1.6 percent<>.
The Czech crown <EURCZK=> held steady and some analysts said
a delay in elections there could provide further support to the
currency as it is seen positive for budget plans.[]
Hungary's bonds extended gains, supported by the currency's
strength and expectations for further interest rate cuts by the
central bank in coming months.
The bank will publish the minutes of its August rate meeting
at 1200 GMT, which may give some clues concerning the rate
outlook. The bank cut rates by 50 basis points in August <NBHI>.
"I was surprised to see this strong opening this morning,
the EURUSD is almost 1.47 and the zloty also firmed," a Budapest
based dealer said.
"Yields dropped by 15 basis points at the short end and
around 10 basis points on long papers, and I expect further
steepening in the curve," a Hungarian trader said.
Dealers said the forint <EURHUF=>, which was up 0.8 percent
at 0842 GMT, was likely to trade in a range between 270 and 272
versus the euro.
Asian stocks surged to their highest level this year while
the U.S. dollar fell, after Federal Reserve Chairman Ben
Bernanke said the U.S. recession was "very likely over" though
he added the recovery would be very slow. []
The Polish zloty <EURPLN=> was up 0.4 percent.
"Continuation of good sentiment may help the zloty
strengthen to around 4.10 against the euro during Wednesday's
session," bank BPH said in a morning note.
It added though that a possible reverse in the movement of
the euro-dollar cross may lead to a weakening of the zloty.
"The EUR-USD pair is nearing a significant resistance level
of 1.47. Today's domestic data (corporate wages) may only have a
small and short-term impact on the zloty," BPH added.
Poland's statistics office publishes August corporate sector
wages <PLWAGE=ECI> data later in the day and analysts expect
wages to have grown by 3.7 percent year-on-year, below the 3.9
percent growth reported for July.
Polish debt markets also started the day firmer.
"The debt market has opened a touch up and, as in recent
days, it's mostly following the zloty and bourse. And since the
bourse opened a bit stronger today, we are following," said
Marek Kaczor, a debt dealer from PKO BP.
The Finance Ministry is holding a buy-back of its treasury
bills worth up to 5.9 billion zlotys and maturing in November
2009.
CZECH POLITICS IN FOCUS
The Czech crown is not expected to react strongly on
Wednesday when talks should continue on the next steps after
leftist parties scuppered plans for November early elections.
Some analysts said the delay in the elections was positive
for the budget which needs cuts, while others said budget
problems were far from being resolved.
"The delay of the general election to the regular time partly
minimises the risk of an interim budget regime. On the other
hand, the current composition of parliament, as well as a
protracted pre-election period, represents a marked risk that the
deterioration of the fiscal stance will continue," said Vojtech
Benda, a senior analyst at ING in Prague.
"We believe that if the Czech caretaker government remains
in power it could be positive for the CZK as the interim
government could push through important budget cuts for next
year," Danske Bank said in a morning note.
The Romanian leu held largely steady, with regional optimism
offset by uncertainty over IMF-mandated fiscal reforms and the
stability of Romania's ruling centre-left coalition.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.333 25.355 +0.09% +5.61%
Polish zloty <EURPLN=> 4.142 4.159 +0.41% -0.65%
Hungarian forint <EURHUF=> 269.9 272.11 +0.82% -2.35%
Croatian kuna <EURHRK=> 7.291 7.323 +0.44% +1.01%
Romanian leu <EURRON=> 4.26 4.262 +0.05% -5.77%
Serbian dinar <EURRSD=> 93.36 93.45 +0.1% -4.16%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -4 basis points to 197bps over bmk*
7-yr T-bond CZ7YT=RR +14 basis points to +195bps over bmk*
10-yr T-bond CZ10YT=RR +2 basis points to +190bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +2 basis points to +389bps over bmk*
5-yr T-bond PL5YT=RR +1 basis points to +352bps over bmk*
10-yr T-bond PL10YT=RR +1 basis points to +294bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR 0 basis points to +608bps over bmk*
5-yr T-bond HU5YT=RR +1 basis points to +547bps over bmk*
10-yr T-bond HU10YT=RR 0 basis points to +466bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1041 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
(Reporting by regional bureaux, writing by Krisztina Than;
Editing by Stephen Nisbet)
