* Leu moves sideways, Romania postpones eurobond issue.
* Other currencies, stocks firm on global sentiment
* Polish road bonds tender drives yields lower
(Recasts with fresh prices, detail)
By Dagmara Leszkowicz and Sandor Peto
WARSAW/BUDAPEST, Oct 14 (Reuters) - Central European assets
firmed on Wednesday as appetite for risk rose in global markets,
overshadowing political and fiscal risks in emerging Europe.
Romania's leu <EURRON=> moved sideways after a fall on
Tuesday when the country's parliament voted to topple the
government.
But the forint <EURPLN=> strengthened 0.8 percent versus the
euro by 1403 GMT, the Polish zloty<EURPLN=> firmed 0.6 percent
to 4.197, while the Czech crown gained 0.3 percent to 25.382.
Stock markets in the region also firmed, with Bucharest's
BETI <> index up almost five percent, while Polish and
Hungarian bonds firmed sharply, helped by Polish inflation data
and a well-bid bond tender. [] []
Hungary's five- and 10-year government bond yields fell 14
basis points as some domestic and foreign investors said the
yield curve steepened too much in the past months due to
expectations for central bank (NBH) rate cuts.
"A rate cut of 50 basis points (to 7.0 percent) is priced in
for next Monday," one trader said. "But there may be
profit-taking after Monday ... and the amount of issuance next
year is also a big risk."
RISKS REMAIN
More signs of financial woes in Latvia have also threatened
to dent the region's markets, but those concerns eased after
officials said planned budget cuts were on track, dealers said.
[]
Romania, though, has postponed a eurobond issue due to the
political uncertainty<nBUC003511> and both Standard and Poor's
and Moody's said its rating could be pressured if a political
deadlock prevents it implementing its promises to the IMF.
"If political instability persists, Romania could de-couple
from the rest of the region in terms of both growth and currency
developments," Nicolaie Alexandru-Chidesciuc of ING Bank in
Bucharest said in a research note.
"Another rating downgrade would become more likely as well."
The centrists will stay in power in Bucharest until
parliament approves a new government.
But forming an administration will be tough before a
presidential election at the end of November, which has
polarised political groups and split the previous coalition
earlier this month.
European Central Bank Governing Council member Ewald Novotny
said on Tuesday that political instability did not help the EU's
new member states, but that the region had Europe's highest
mid-term growth potential. []
Polish markets are also eyeing news about an ambitious
privatisation plan which assumes the raising of some 37 billion
zlotys by the end of 2010, and inflows which may help the zloty.
"The privatisation plan may increase these (capital) inflows,
even if the Treasury Ministry does not manage to meet its
target," said Bartosz Pawlowski, fx strategist at BNP Paribas.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.832 25.915 +0.32% +3.57%
Polish zloty <EURPLN=> 4.197 4.223 +0.62% -1.95%
Hungarian forint <EURHUF=> 267.03 269.15 +0.79% -1.3%
Croatian kuna <EURHRK=> 7.253 7.25 -0.04% +1.54%
Romanian leu <EURRON=> 4.29 4.294 +0.09% -6.42%
Serbian dinar <EURRSD=> 92.871 92.95 +0.09% -3.65%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -20 basis points to 122bps over bmk*
7-yr T-bond CZ7YT=RR -18 basis points to +146bps over bmk*
10-yr T-bond CZ10YT=RR -20 basis points to +120bps over
bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -2 basis points to +380bps over bmk*
5-yr T-bond PL5YT=RR +2 basis points to +335bps over bmk*
10-yr T-bond PL10YT=RR -1 basis points to +299bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +7 basis points to +548bps over bmk*
5-yr T-bond HU5YT=RR +5 basis points to +517bps over bmk*
10-yr T-bond HU10YT=RR +5 basis points to +464bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1603 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
For related news and prices, click on the codes in brackets: All
emerging market news []
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Latin America spot FX <LATAMFX=>
Other news and reports
World central bank news [] Economic Data Guide <ECONGUIDE>
Official rates [] Emerging Diary []
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(Reporting by Reuters bureaus, writing by Dagmara Leszkowicz
and Sandor Peto, editing by Patrick Graham)
