* Czech cbank keeps rates flat as expected
* Romanian centre-left govt survives no-confidence vote
* Hungarian bond yields fall 3-7 bps after debt tenders
(Updates throughout)
By Marius Zaharia and Dagmara Leszkowicz
BUCHAREST/WARSAW, Sept 24 (Reuters) - Romania's leu rose
after the government survived a no-confidence vote on Thursday,
while the Czech crown lagged peers as doubts grew again whether
its parliament could come to terms on an austerity package.
In Hungary, expectations for further cuts in interest rates,
including a 50 basis point reduction next week [],
helped the country sell more bonds than previously planned at
its three auctions on Thursday [].
In reaction, Hungarian bonds yields fell 3-7 basis points.
The Czech central bank also kept interest rates at a record
low of 1.25 percent as expected amid an outlook for mild
inflation.
Romania's centre-left government victory in the vote in
parliament gave it approval for tough spending cuts required by
the International Monetary Fund in return for aid.
[]
At 1350 GMT, the Romanian leu <EURRON=> was 0.5 percent up,
the Polish zloty <EURPLN=> and the Hungarian forint <EURHUF=>
were 0.5 percent and 0.4 percent stronger, while the crown
<EURCZK=> was flat.
The Czech parliament is also due to vote on austerity
measures aimed at cutting the 2010 budget gap from an expected
7.5 percent of gross domestic product to 5.2 percent.
[].
The Czech crown had edged up after an agreement among
parties looked close on Wednesday, but on Thursday policymakers
clashed over the fiscal package, making its approval doubtful
[]. The interim government reiterated this would
trigger its resignation.
"This risky scenario could push politicians to act
responsibly," Komercni Banka said in a note. "We expect some
kind of market relief reaction in this case, otherwise there is
a risk of bonds sell-off."
FRAGILE RECOVERY
The zloty failed to react to Moody's comments that the
agency was comfortable with Poland's rating outlook short-term,
but it may consider cutting it if no fiscal reforms will be
taken after next year's elections [].
Poland is the only country in the eastern European Union to
avoid recession this year and the zloty is seen outperforming
its peers in the longer run. But this week the zloty was pulled
back by expectations of a big corporate payout.
The Ifo business sentiment in Germany, the region's main
trading partner, climbed to its highest in a year in September
but fell short of expectations for a stronger rise, signalling
recovery will be sluggish [].
EBRD president Thomas Mirow said on Wednesday the credit
crunch was far from over and that the region may enter a period
of low or zero growth [].
The leu has been this week's top performer after the IMF
approved a second tranche of its loan late on Monday. Some
dealers speculated Romania's central bank intervened this week
to prop it up, signalling it was ready to use IMF cash to defend
the unit.
In other markets, Polish bonds strengthened after
Wednesday's successful tenders and finance ministry comments
that it plans to issue foreign debt in the fourth quarter and
ease pressure on domestic debt [].
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.158 25.152 -0.02% +6.34%
Polish zloty <EURPLN=> 4.162 4.183 +0.5% -1.13%
Hungarian forint <EURHUF=> 269.86 271.05 +0.44% -2.34%
Croatian kuna <EURHRK=> 7.262 7.263 +0.01% +1.42%
Romanian leu <EURRON=> 4.207 4.226 +0.45% -4.58%
Serbian dinar <EURRSD=> 93.141 93.077 -0.07% -3.93%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -15 basis points to 194bps over bmk*
7-yr T-bond CZ7YT=RR -2 basis points to +178bps over bmk*
10-yr T-bond CZ10YT=RR -2 basis points to +169bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -1 basis points to +387bps over bmk*
5-yr T-bond PL5YT=RR +8 basis points to +332bps over bmk*
10-yr T-bond PL10YT=RR +1 basis points to +283bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -13 basis points to +586bps over bmk*
5-yr T-bond HU5YT=RR -2 basis points to +511bps over bmk*
10-yr T-bond HU10YT=RR -5 basis points to +434bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1551 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 Marius Zaharia and
Dagmara Leszkowicz; Editing by Andy Bruce/Patrick Graham)
