* Bonds drop; Hungary to issue new debt after long pause
* Zloty edges up, favoured against forint, leu
* Hungarian markets look to new govt
(Updates throughout)
By Jason Hovet and Marius Zaharia
PRAGUE/BUCHAREST, April 17 (Reuters) - Hungarian plans to
restart debt auctions pushed the country's bond prices lower on
Friday, while the forint trailed emerging European peers as the
Polish zloty outperformed.
Hungary plans to sell bonds every other Thursday from April
23 []. Apart from smaller February auctions, bond
sales in Hungary have been frozen since last autumn when central
European debt markets seized up in the global financial crisis.
However, investors have started returning to riskier assets
after pledges for more resources for emerging markets earlier
this month, and debt sales in Warsaw and Prague have been
well-bid in the last month.
But analysts stayed cautious on a full regional recovery.
"The government can hold auctions, but we will see later
whether there will be demand, whether foreign investors return.
It will take time," a Budapest dealer said.
By 1341 GMT, the forint <EURHUF=> fell 0.8 percent, while
the Polish zloty <EURPLN=> edged up against the euro, with this
week's move to secure an IMF credit line -- designed for
countries with stronger fundamentals -- swaying investors to
favour the unit against peers.
A survey by State Street Global Investors showed aggregate
flows into global emerging markets were at its highest reading
since June 2007.
Also, data this week from Prague showed trading volumes on
the bourse <> fell 54 percent in the first quarter.
OUTPERFORMANCE
Analysts say it is likely that the zloty -- the region's
biggest faller from record highs last summer -- will reverse its
underperformance.
This could impact other currencies like the forint,
especially as markets in Hungary size up the new government
tasked with leading the country out of recession.
"More people are favouring cross trades (in the region),
mostly against the forint," said a central European currency
dealer based in Stockholm. "People are looking for higher levels
on the zloty/forint."
Polish wages rose above forecast in March [], and
analysts said the data may be a reason for the central bank to
hold rates flat this month. The zloty and bonds reacted little.
In Hungary, one of the worst-hit emerging countries, Prime
Minister Gordon Bajnai was sworn in this week, and analysts say
he will face many painful fiscal measures.
"For Hungary and the forint, much will depend on general
risk perception on financial markets in the shorter term and on
Bajnai's ability to enforce the planned measures in the medium
to long term," Commerzbank wrote on Friday.
"Hungary is not out of the woods just yet."
A Reuters poll on Friday forecast the Hungarian economy
could fall by 5.1 percent in 2009, pushing for lower interest
rates although central bankers will likely keep the base rate at
9.5 percent when they meet next week. []
The Czech crown <EURCZK=>, added 0.2 percent to 26.707 per
euro, while in Romania the leu <EURRON=> was almost flat at
4.211 ahead of the orthodox Easter holiday.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.707 26.767 +0.18% +0.17%
Polish zloty <EURPLN=> 4.285 4.293 +0.19% -3.97%
Hungarian forint <EURHUF=> 294.6 292.3 -0.78% -10.54%
Croatian kuna <EURHRK=> 7.377 7.375 -0.03% -0.16%
Romanian leu <EURRON=> 4.211 4.214 +0.07% -4.67%
Serbian dinar <EURRSD=> 92.707 92.86 +0.17% -3.48%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -6 basis points to 212bps over bmk*
4-yr T-bond CZ4YT=RR -15 basis points to +193bps over bmk*
8-yr T-bond CZ8YT=RR -8 basis points to +286bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -5 basis points to +402bps over bmk*
5-yr T-bond PL5YT=RR -1 basis points to +348bps over bmk*
10-yr T-bond PL10YT=RR +1 basis points to +298bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +11 basis points to +906bps over bmk*
5-yr T-bond HU5YT=RR +3 basis points to +857bps over bmk*
10-yr T-bond HU10YT=RR +14 basis points to +751bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1641 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/Marius
Zaharia, editing by Stephen Nisbet)
