* Zloty little moved by CPI data after 6-mo highs last week
* Stocks weaker, Irish debt problems weigh on sentiment
* Romania sells 6-month debt below 7 pct yield cap
* Hungarian PM Orban to speak about budget, bonds drop
(Updates with Polish CPI, Romania auction)
By Sandor Peto and Jason Hovet
BUDAPEST/PRAGUE, Nov 15 (Reuters) - The zloty was little
changed after lower than forecast Polish inflation on Monday, as
uncertainty over whether Ireland would seek a debt bailout kept
investors in emerging European assets guessing.
The dollar's rise against central Europe's reference
currency, the euro <EUR=>, kept regional currencies under
pressure, as did technical factors on the zloty that kicked in
after it reached a six-month high last week but failed to hold
below the 3.89 per euro resistance level.
At 1411 GMT, the zloty <EURPLN=> was down 0.1 percent
against the euro at 3.928, and the Czech crown <EURCZK=> -- the
region's top performer this year -- shed 0.2 percent.
Poland's annual inflation rose to 2.8 percent in October, a
shade below a 2.9 percent forecast, and did little to sway the
market either way on whether the Polish central bank will become
the first in the region to hike interest rates from record lows.
"(The inflation data) is still quite a high reading and may
make doves at the MPC (Monetary Policy Council) consider a
decision to increase rates," said Monika Kurtek, senior
economist at BPH Bank.
"But we think there are still more reasons to leave rates at
the current level and we expect the MPC not to change rates at
the next sitting" on November 23.
Markets have been split on chances of a rate rise in Poland
to tame inflationary pressures in the fastest-growing European
Union economy. Some policymakers who voted for stable rates in
the slim majority at the last meeting have since signalled a
more hawkish stance.
Analysts, though, say the bank may not risk quick zloty
appreciation with a rate rise in light of a new round of
quantitative easing (QE2) in the United States that is seen
weakening the dollar and pushing investors towards emerging
markets for higher growth and yields.
Central bank governor Marek Belka said on Monday the better
growth outlook could stoke inflation and lead to rate rises in
the medium term, but further appreciation of the zloty will curb
the required scope of monetary tightening. []
ROMANIA DEBT SHIFT
Romania signalled on Monday it is ready to ditch a six-month
strategy of capping yields at 7 percent. The finance ministry
has paid higher interest than that at two tenders this month.
On Monday the ministry sold 792 million lei ($252.2 million)
in six-month treasury bills, less than 1 billion lei planned but
with the average accepted yield slightly down at 6.96 percent.
"We are positioning to an average yield below 7 percent for
six-month paper and ... we are trying to give shape to the yield
curve which has been flat until now," deputy Finance Minister
Bogdan Dragoi told Reuters. []
Investors have demanded higher yields due to risks from
fiscal tightening implemented to comply with Romania's IMF-led
aid deal.
Romania's leu <EURRON=> was little changed at the upper end
of this year's range of 4.2-4.3 per euro. Dealers saw little
scope to break out of that range.
The region's equity indices mostly fell, with Bucharest
<> leading the loss with a 0.5 percent fall. Budapest
<> rose 0.8 percent after steep losses in recent weeks due
to government plans to keep supplementary sectoral corporate
taxes in place for years.
The forint <EURHUF=> rose 0.2 percent ahead of a speech by
Prime Minister Viktor Orban laying out details of his
government's 2011 budget.
Hungarian government bonds eased after Friday's rebound,
with the 3-year yield rising 10 basis points to 6.80 percent.
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.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.63 24.575 -0.22% +6.85%
Polish zloty <EURPLN=> 3.928 3.924 -0.1% +4.48%
Hungarian forint <EURHUF=> 276.12 276.68 +0.2% -2.09%
Croatian kuna <EURHRK=> 7.393 7.38 -0.18% -1.13%
Romanian leu <EURRON=> 4.292 4.293 +0.02% -1.27%
Serbian dinar <EURRSD=> 106.7 107.07 +0.35% -10.14%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -7 basis points to 64bps over bmk*
7-yr T-bond CZ7YT=RR -2 basis points to +80bps over bmk*
10-yr T-bond CZ9YT=RR -1 basis points to +98bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +10 basis points to +562bps over bmk*
5-yr T-bond HU5YT=RR 0 basis points to +537bps over bmk*
10-yr T-bond HU10YT=RR +1 basis points to +454bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1513 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 Gergely
Szakacs/Sandor Peto/Jason Hovet; Editing by Hugh Lawson, John
Stonestreet)
