* Markets eyeing Polish rate meeting, Hungarian fiscal plan
* Romanian budget record surplus, leu currency firmer
* Czech crown, yields edge higher on cbanker rate comments
(Adds comments, bond yields)
By Luiza Ilie
BUCHAREST, Feb 28 (Reuters) - Hungary's forint led a slight
rise in emerging European currencies on Monday as global risk
appetite improved, but investors remained cautious ahead of the
publishing of Budapest's fiscal reform plans and a Polish rate
decision.
By 1045 GMT, the zloty <EURPLN=> and the forint were both up
roughly 0.2 percent to the euro and traders saw potential for
further moderate firming, although they said concerns over oil
prices stemming from Libyan unrest would keep regional gains
limited.
Oil prices rose more than $1 per barrel on Monday as
protests in Oman fuelled wider concern about security of supply
from the Middle East after uprisings in Libya, heightening
concerns that unrest could spread to other big oil producers.
A thin majority of analysts expected Poland's central bank
to leave borrowing costs unchanged on Wednesday, following a
quarter point hike in January, but monetary tightening is seen
as far from over. []
"Undoubtedly, this week's eye-catcher is the Monetary Policy
Council's meeting," KBC said in a research note. "Although we
think that interest rates will be kept at current levels, a
certain part of investors clearly bets on a rate hike."
In Hungary, the forint firmed and bond yields dropped
steeply from Friday, with the market broadly optimistic about
upcoming government reforms, dealers said. Details of the plans
are expected on Tuesday.
Investors have driven the forint higher and yields have
dropped by more than a full percentage point since early
December in anticipation of measures expected to put the budget
on a sustainable footing in three years. []
But analysts and dealers have warned the plan may leave
markets disappointed in the longer-run.
"Nobody can truly say what the reaction will be to the
announcements," one Budapest dealer said.
"It's a total dark horse, this package. Anything substantive
will be welcome on the market, though, so I don't expect a big
correction even if the measures fall short of expectations
slightly."
Elsewhere in the region, the Czech crown <EURCZK=> was up
0.2 percent to the euro and bond yields edged down after central
bank Governor Miroslav Singer was quoted by magazine Profit as
saying that while low Czech interest rates are not sustainable
in the long term, they work for now. []
Dealers also said the market was supported by expectations
that second quarter bond issuance calendar, due on Tuesday,
would be low and that the Czechs may tap foreign bond markets in
the first half of the year. []
The Romanian leu <EURRON=> was up 0.1 percent to the euro
after data showed the fiscal budget ran a modest surplus in
January.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.416 24.457 +0.17% +2.39%
Polish zloty <EURPLN=> 3.967 3.974 +0.18% -0.23%
Hungarian forint <EURHUF=> 271.75 272.15 +0.15% +2.29%
Croatian kuna <EURHRK=> 7.427 7.421 -0.08% -0.63%
Romanian leu <EURRON=> 4.213 4.217 +0.09% +0.47%
Serbian dinar <EURRSD=> 103.1 103.2 +0.1% +2.74%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR 0 basis points to 24bps over bmk*
7-yr T-bond CZ7YT=RR -1 basis points to +89bps over bmk*
10-yr T-bond CZ9YT=RR -1 basis points to +88bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +2 basis points to +354bps over bmk*
5-yr T-bond PL5YT=RR 0 basis points to +348bps over bmk*
10-yr T-bond PL10YT=RR -2 basis points to +312bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -12 basis points to +498bps over bmk*
5-yr T-bond HU5YT=RR -21 basis points to +465bps over bmk*
10-yr T-bond HU10YT=RR -16 basis points to +414bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1158 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaux; writing by Luiza Ilie; editing
by Patrick Graham)
