* Czech cbank leaves rates unchanged; crown, rates jump
* Romania rejects bond bids; Hungary sells but yields jump
(Updates throughout)
By Jason Hovet and Marius Zaharia
PRAGUE/BUCHAREST, Nov 5 (Reuters) - The Czech crown rose to
a two-week high on Thursday after the central bank left interest
rates unchanged, pushing some investors to unwind positions
built on the chance of a cut.
The crown jumped as much as 0.8 percent in the afternoon and
bid 0.6 percent up on the day at 25.848 to the euro by 1614 GMT
to lead gains in central Europe, which has struggled to win back
losses suffered over the past month.
The Czech central bank voted 4-3 to leave interest rates at
a record low after new forecasts showed rising inflation and a
return to economic growth next year. []
Interest rate swaps in the 1-2 year range retreated up 10-15
basis points as markets had mostly priced in a cut after
comments last month from central bank Governor Zdenek Tuma and
his deputy spoke in favour of easing. []
"(The bank) is slightly more hawkish than I would have
expected. But at the same time the forecast certainly points to
a cut," said Dalimil Vyskovsky, a fixed income dealer at
Komercni Banka.
"I think today's jump in rates will correct tomorrow, but I
do not see much space to go down."
Other central European currencies recovered on Thursday,
bolstered by a stronger euro after European Central Bank chief
Jean-Claude Trichet said the euro zone economy would recover
next year. []
The Hungarian forint <EURHUF=> edged up 0.1 percent, with
investors seeing some signs of improvement for Hungary's
hard-hit manufacturing sector. []
The zloty <EURPLN=> was up a touch at 4.247. Markets there
got a jolt on Wednesday after Poland said it wants to cut the
amount of money it transfers to private pension funds to put a
lid on rising public debt. []
TOUGHER SALES
Rising public debt, political uncertainty and a slow
economic recovery have returned pressure on central Europe after
a half-year rally.
Analysts expect a correction in the past month that has
knocked around 1-2 percent from currencies and reversed a fall
in bond yields to just be a blip, although the region is seen
underperforming other developing countries.
Romania's leu <EURRON=> fell back 0.2 percent to the 4.3 per
euro level on Thursday and credit default swaps (CDS) rose a day
after the proposed cabinet of Prime Minister designate Lucian
Croitoru failed to gain parliament's approval. []
Romania's president has said he will pick the next prime
minister from his political camp, but did not rule out an
interim cabinet staying until after a Nov. 22 presidential poll.
The political jostling has unnerved investors, and the
finance ministry rejected all bids at 5-year bond tender on
Thursday due to too-high yields, raising concerns about this
year's remaining issuance plans. []
Hungary sold all the government bonds offered at its
auctions on Thursday, but a rise of about 35 basis points in
yields from a previous tender and a lower amount of bids signal
concern that demand may tighten in the rest of the year.
The two countries both are holders of international aid.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.848 26.008 +0.62% +3.5%
Polish zloty <EURPLN=> 4.247 4.251 +0.09% -3.11%
Hungarian forint <EURHUF=> 275.47 275.79 +0.12% -4.33%
Croatian kuna <EURHRK=> 7.263 7.278 +0.21% +1.4%
Romanian leu <EURRON=> 4.3 4.291 -0.21% -6.64%
Serbian dinar <EURRSD=> 93.8 94.44 +0.68% -4.61%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR 0 basis points to 103bps over bmk*
7-yr T-bond CZ7YT=RR +7 basis points to +105bps over bmk*
10-yr T-bond CZ10YT=RR +3 basis points to +93bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -2 basis points to +364bps over bmk*
5-yr T-bond PL5YT=RR -1 basis points to +321bps over bmk*
10-yr T-bond PL10YT=RR -1 basis points to +280bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +5 basis points to +540bps over bmk*
5-yr T-bond HU5YT=RR +5 basis points to +476bps over bmk*
10-yr T-bond HU10YT=RR -3 basis points to +415bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1715 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaus; Writing by Jason Hovet and
Marius Zaharia; Editing by Ruth Pitchford and Andy Bruce)
