* Zloty retreats from 12-month high lifts crown
* Other FX relatively unchanged
* Polish bonds give back gains, 10-yr papers hit most
(Adds fresher quotes, prices)
By Jason Hovet and Dagmara Leszkowicz
PRAGUE/WARSAW, Jan 14 (Reuters) - Poland's zloty retreated
from a one-year high hit earlier on Thursday while the Czech
crown strengthened despite worse than expected output data as
investors took profit and unwound regional cross trades.
The zloty, still off 20 percent from 2008 peaks, has been
favoured by investors for at least two months, and analysts said
demand for local debt and stocks could underpin an attack on the
key 4 per euro level as global appetite for risk extends a
rally.
But after early gains, by 1520 GMT the Polish unit <EURPLN=>
was almost unchanged against the euro while the Czech crown
<EURCZK=> gained 0.8 percent to the common currency.
"Long zloty against short crown has been very popular
recently and what we see today is just a profit-taking," said
Lukasz Wojtkowiak, FX strategist at Millennium bank.
"Additionally, slightly worse sentiment globally helped the
crown to lift as investors close their positions in riskier
assets."
Backed by the lowest interest rates in central Europe, the
crown has been used as a funding currency for higher-yielding
peers like the zloty, which is expected to outperform due to its
stronger economic recovery. []
Czech industrial output failed to put a dent in the currency
after a 0.1 percent year-on-year in November came in well below
analysts expectations of a 1.3 percent rise. []
Hungary's forint <EURHUF=> and Romania's leu <EURRON=> have
also hit multi-month highs this week, but were relatively flat
on Thursday.
In Romania dealers said an approval of a 2010 austerity
budget expected late on Thursday or on Friday, could add fuel to
leu strengthening by pointing to an unlocking of IMF-led aid.
"While such a development (approval) may be somewhat priced
in, we believe it could put additional firming pressure on the
RON," analyst at ING bank wrote in a note.
BOND DEMAND
Regional stocks tracked western peers higher, giving
currencies further support after record demand for a Polish
2-year bond auction on Wednesday boosted the zloty
[]. Analysts said the rally still had some steam
given the dollar is staying weak.
The auction followed Poland's sale of 3 billion euros worth
of 15-year bonds this week, taking advantage of tightening yield
spreads with western peers while Hungarian auction on Thursday
saw demand at several times what it sold. [].
Domestic zloty-denominated bonds gave up some gains on
Thursday but dealers said longer-dated bonds, the worst hit,
should not weaken more ahead of the next debt tender next week.
"Since today's 10-year bonds selloff was big, I don't expect
the paper to weaken more," said Pawel Bialczynski, dealer at BRE
bank in Warsaw.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.975 26.173 +0.76% +1.32%
Polish zloty <EURPLN=> 4.054 4.057 +0.07% +1.23%
Hungarian forint <EURHUF=> 267.47 267.28 -0.07% +1.08%
Croatian kuna <EURHRK=> 7.285 7.291 +0.08% +0.33%
Romanian leu <EURRON=> 4.127 4.124 -0.07% +2.68%
Serbian dinar <EURRSD=> 96.993 97.09 +0.1% -1.15%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +3 basis points to 72bps over bmk*
7-yr T-bond CZ7YT=RR +13 basis points to +119bps over bmk*
10-yr T-bond CZ10YT=RR +12 basis points to +115bps over
bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +2 basis points to +385bps over bmk*
5-yr T-bond PL5YT=RR +2 basis points to +328bps over bmk*
10-yr T-bond PL10YT=RR +2 basis points to +284bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +1 basis points to +541bps over bmk*
5-yr T-bond HU5YT=RR +2 basis points to +492bps over bmk*
10-yr T-bond HU10YT=RR +1 basis points to +426bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1520 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet; editing
by Patrick Graham)
