* Markets eye Hungary pension vote later in day
* Czech cbankers say rates stable now, crown weak
* Stocks pull back from session highs
(Updates throughout)
PRAGUE, Dec 13 (Reuters) - Eastern European currencies were
broadly steady on Monday as investors assessed future interest
rate paths in the region after largely pricing in the latest
controversial fiscal moves in Hungary.
Hungary's forint edged up slightly ahead of a parliamentary
vote expected to pass plans to plug the country's budget gap
with private pension fund contributions.
The Czech crown eased a touch to 25.165 per euro, losing
ground for a third straight session. Analysts said interest rate
differentials meant more weakening was likely in the remainder
of the year.
Czech rates, the lowest in the region at 0.75 percent, will
likely stay as they are for the time being, Vice-Governor
Vladimir Tomsik was quoted as saying on Monday. []
Bank board member Eva Zamrazilova, the lone voter for a rate
rise in past meetings, said on Monday she saw no necessity to
immediately raise interest rates but reiterated her view that
rates did not need to stay at record lows.
"We expect that rising global yields should weigh on the
Czech crown. Technically speaking, EUR/CZK could move further to
25.5 (per euro)," KBC analysts said on Monday.
Boosted by stock rises, the forint <EURHUF=> edged up 0.1
percent to 277.97 to the euro and the Polish zloty <EURPLN=>
added a similar amount to bid at 4.025 per euro by 1207 GMT.
Romania's leu <EURRON=> was steady.
Stock markets gave up early gains, with some profit-taking
on an end-of-year rally that has tracked gains in global stocks
on improving economic outlooks in major economies. Warsaw
<> and Budapest <> dipped, while Prague <> kept an
early half percent gain.
FORINT CALM, OUTLOOK UNCLEAR
Hungary's central bank became the first in the region to
begin undoing two years of policy loosening in central Europe
last month with a rate rise, citing a weakening risk profile.
Hungarian lawmakers are widely expected to roll back a 1997
pension reform on Monday, allowing the government to effectively
seize up to $14 billion in assets to reduce the budget gap and
avoid austerity measures. []
RBC strategist Nigel Rendell said markets have priced in the
pension changes and would be driven by risk appetite and more
clarity from the rate outlook in the remaining sessions of 2010.
"It is going to be a combination of international factors,
and any comments out of the central bank about potential
tightening of interest rates or conflicts with the economy
ministry," he said.
Prime Minister Viktor Orban's government, which enjoys a
large parliament majority, has taken a different fiscal route
than others in Europe, which have focused on slashing spending.
But the pension reforms along with new taxes on banks and
business and the dropping of a 20 billion euro safety net from
international lenders have spooked investors, hurt ratings and
hit asset prices.
The government and the bank have also skirmished, with the
former calling for lower rates than the current 5.5 percent.
"Last week's inflation data supported the view of further
monetary tightening, so until it becomes clear just how long
this tightening cycle may last and where it may peak I do not
think you would see much action in bonds either," a Budapest
currency dealer said.
The forint has lost 5 percent against the euro since the
Fidesz government won power in April, and 3- and 5-year bond
yields have jumped more than 2 percentage points to almost 8
percent.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.165 25.162 -0.01% +4.58%
Polish zloty <EURPLN=> 4.025 4.028 +0.07% +1.96%
Hungarian forint <EURHUF=> 277.97 278.3 +0.12% -2.74%
Croatian kuna <EURHRK=> 7.408 7.388 -0.27% -1.33%
Romanian leu <EURRON=> 4.292 4.291 -0.02% -1.27%
Serbian dinar <EURRSD=> 106.85 106.86 +0.01% -10.27%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -6 basis points to 73bps over bmk*
7-yr T-bond CZ7YT=RR -3 basis points to +74bps over bmk*
10-yr T-bond CZ9YT=RR -1 basis points to +85bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -1 basis points to +358bps over bmk*
5-yr T-bond PL5YT=RR 0 basis points to +333bps over bmk*
10-yr T-bond PL10YT=RR -1 basis points to +301bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1307 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 []
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 Jason Hovet;
Editing by John Stonestreet/Ruth Pitchford)
