* Forint, zloty recover losses, crown sold vs region
* Hungary revises 2010 GDP fcast, sees smaller contraction
* Serb dinar extends losses, cbank steps in
* Hungary yields shade higher after bond auctions
(Adds Hungary's new GDP fcast, Serb cbank, Hungary bonds)
PRAGUE/BUDAPEST, Jan 28 (Reuters) - The zloty held gains on
Thursday after preliminary data showed the Polish economy grew
more than expected last year, rebounding with the Hungarian
forint as investors scooped up riskier emerging market assets.
Hungary, one of the worst hit in the region by the global
economic crisis, revised its projection for this year's GDP and
now sees a smaller contraction of 0.3 percent, versus an earlier
forecast for a fall of 0.6 percent. []
Investor demand for Hungarian debt held up at a domestic
bond auction earlier in the day, overcoming some market fears of
weaker interest two days after Budapest's $2 billion 10-year
bond issue on Tuesday.
The forint <EURHUF=> was up 0.53 percent at 271.31 to the
euro by 1544 GMT, recouping losses from Wednesday. Bond yields
were steady after the auction.
Central European stock markets also rose with global peers
after U.S. President Barack Obama unveiled plans to revive the
world's largest economy. [].
The zloty <EURPLN=> added 0.54 percent, holding steady after
preliminary gross domestic product data showed 1.7 percent
year-on-year growth in 2009. [] []
"This data shows that the Polish economy stands out in the
region as far as growth is concerned," said Rafal Benecki,
senior economist at ING Bank Slaski in Warsaw. "This data also
provides good prospects for the budget and the bond market."
The Czech crown <EURCZK=> underperformed, dipping 0.23
percent. Dealers said some investors were using the unit as a
funding currency.
"There was a recommendation ... for selling crowns for the
Romanian leu," a Prague dealer said. "Also the long zloty/crown
trade is still on the cards."
Serbia's dinar extended its losses on Thursday, falling by
another 0.5 percent on the day to trade at new lows of
98.50/euro, with the central bank intervening to provide
liquidity to the market hungry for euros to pay for energy
imports and debt servicing, but offered no end to the dinar's
downside. [] []
GROWTH, RECOVERY
The zloty has been tipped by strategists as a central
European outperformer this year due to faster economic recovery.
But currencies are seen shaky over the coming months on
fiscal weakness concerns, and as interest rate cuts weigh on the
forint and leu, according to a Reuters poll. <CEEFXPOLL09>
A fresh regional FX poll is due next week.
Polish Prime Minister Donald Tusk told the Financial Times
that Poland plans to limit growth in discretionary public
spending to 1 percent annually as part of a fiscal rescue plan.
Poland would reach the 3 percent of GDP deficit level
required to join the euro by 2013, he said, but did not give a
date for adopting the currency. []
In Romania, the leu <EURRON=> was basically steady at 4.132
to the euro, underpinned by IMF plans, announced on Wednesday,
to unlock the country's 20 billion euro aid package.
The IMF opened the way for Romania to receive a 3.3 billion
euro slice of the aid after elections ended a political impasse
and lawmakers approved a 2010 austerity budget. []
Hungary's dollar-denominated bond issue this week signalled
Budapest's plans to come off aid from the International Monetary
Fund this year were on track. Further issues are expected to be
only on domestic markets.
Demand for the 50 billion forints in debt on sale in the
domestic market on Thursday was steady compared with auctions
from two weeks ago. []
Hungarian yields were 2-3 basis points higher in the wake of
the auctions in the afternoon, a fixed income trader said. The
3-year bond traded around 7.10 percent.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 26.225 26.165 -0.23% +0.35%
Polish zloty <EURPLN=> 4.07 4.092 +0.54% +0.84%
Hungarian forint <EURHUF=> 271.31 272.74 +0.53% -0.35%
Croatian kuna <EURHRK=> 7.308 7.322 +0.19% +0.02%
Romanian leu <EURRON=> 4.132 4.128 -0.1% +2.55%
Serbian dinar <EURRSD=> 98.57 97.94 -0.64% -2.73%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +5 basis points to 99bps over bmk*
7-yr T-bond CZ7YT=RR +6 basis points to +137bps over bmk*
10-yr T-bond CZ10YT=RR 0 basis points to +126bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR 0 basis points to +383bps over bmk*
5-yr T-bond PL5YT=RR +1 basis points to +329bps over bmk*
10-yr T-bond PL10YT=RR +1 basis points to +289bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +3 basis points to +546bps over bmk*
5-yr T-bond HU5YT=RR +3 basis points to +503bps over bmk*
10-yr T-bond HU10YT=RR 0 basis points to +451bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1544 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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emerging market news []
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(Reporting by Reuters bureaus, writing by Jason Hovet and
Krisztina Than; Editing by Susan Fenton/Ruth Pitchford/Andy
Bruce)
