* Japan nuclear crisis still weighing on sentiment
* Polish wage data in focus after benign Feb inflation
* Hungary bond yields drop, 3-month bills sold at auction
(Adds bonds, updates markets)
By Krisztina Than
BUDAPEST, March 16 (Reuters) - East Europe's currencies held
steady on Wednesday, helped by a rebound in Asian stocks though
Japan's nuclear crisis continued to weigh on sentiment, while
local markets eyed Polish wages data for clues over the rate
outlook.
Hungarian yields dropped slightly, tracking part of a fall
in core debt yields early this week when Budapest markets were
closed due to a national holiday, traders said.
Hungary sold 50 billion forints worth of 3-month treasury
bills at an auction that attracted good demand. <HUAUCTION01>
Polish yields rose slightly after falls on Tuesday on
figures showing inflation was lower than forecast in February,
boosting expectations the central bank may keep rates steady in
April.
An apparent easing of inflation worries there helped
Hungarian yields edge lower, a fixed income trader in Budapest
said.
"Crude prices have retreated, the Fed issued dovish comments
and will certainly not increase interest rates," he said.
"(European Central Bank rate setter Christian) Noyer's
comments (on the Japanese crisis) show that the ECB might also
rethink its earlier signal for a rate hike, while Germany's
latest economic sentiment indicator was worse than expected. As
a result of all this, core market debt yields have fallen."
Analysts said Noyer's comments had not significantly diluted
expectations of an ECB rate hike in April. []
Hungarian markets will be looking for news from a government
roadshow starting this week in Europe and the United States and
expected to lead to an issue of a new dollar benchmark bond.
[]
The region's currencies stabilised on Wednesday after falls
earlier this week on the Japanese nuclear crisis. The weakening
of east European currencies had been contained so far.
Asian financial markets rose on Wednesday with Tokyo stocks
rebounding after a steep two-day selloff, but markets remained
jittery as Japan struggled to contain a crisis at an
earthquake-crippled nuclear plant. []
By 1032 GMT the forint <EURHUF=> was flat while the Polish
zloty <EURPLN=> had lost 0.2 percent.
Budapest stocks <> fell 0.8 percent by 1032 GMT, while
Warsaw stocks <> were down 0.6 percent. The Prague <>
bourse was up 0.6 percent.
The Czech crown <EURCZK=> was treading water, and dealers
said it may draw some support from rising equity markets <>
and stronger retail sales data than expected. []
Romania's leu <EURRON=> was flat ahead of a parliamentary
vote of confidence against the coalition government's
IMF-mandated reforms, which is widely expected to fail.
[] The vote is expected at about 1700 GMT.
POLISH DATA
In Poland, the focus will be on wages data as investors seek
further clues about the interest rate outlook.
"Unemployment and wages data will be of interest in Poland
especially after February CPI proved a downside surprise
yesterday," BNP Paribas said in a note.
"...The market is now expecting rates to stay unchanged in
April."
Poland's consumer price inflation <PLCPIY=ECI> stood at 3.6
percent year-on-year in February, unchanged from January's
revised 3.6 percent, statistics office data showed on Tuesday,
which cooled rate hike expectations for April.
Polish bond yields edged higher after a fall on Tuesday.
"We're seeing a correction after yesterday's session. We're
especially seeing a selloff of longer-term papers," said one
Warsaw bond dealer.
In Hungary, a trader said global concerns over inflation
could shift to worries about growth, which could hit Hungary.
"In the short term (Hungarian) yields may go even lower,
apparently, mainly due to the lower crude price (over the past
week), but this is not a safe thing," the trader said.
"If there is a negative change in core markets growth, that
will affect us."
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.375 24.382 +0.03% +2.56%
Polish zloty <EURPLN=> 4.059 4.052 -0.17% -2.49%
Hungarian forint <EURHUF=> 274.04 273.89 -0.05% +1.44%
Croatian kuna <EURHRK=> 7.373 7.382 +0.12% +0.09%
Romanian leu <EURRON=> 4.179 4.176 -0.07% +1.29%
Serbian dinar <EURRSD=> 102.5 102.58 +0.08% +3.34%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +3 basis points to 21bps over bmk*
7-yr T-bond CZ7YT=RR +6 basis points to +74bps over bmk*
10-yr T-bond CZ9YT=RR +2 basis points to +75bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +3 basis points to +352bps over bmk*
5-yr T-bond PL5YT=RR +3 basis points to +341bps over bmk*
10-yr T-bond PL10YT=RR +2 basis points to +313bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +5 basis points to +513bps over bmk*
5-yr T-bond HU5YT=RR -1 basis points to +495bps over bmk*
10-yr T-bond HU10YT=RR -1 basis points to +434bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1132 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Krisztina Than; editing by Toby Chopra, John
Stonestreet)
