* Polish 10-yr bonds weaker after auction
* Hungary weaker across curve as cbank flags uncertainties
* Currencies little changed, Ireland closely watched
(Updates throughout)
By Marius Zaharia and Dagmara Leszkowicz
BUCHAREST/WARSAW, Nov 17 (Reuters) - Hungarian government
bonds fell on Wednesday after the central bank flagged
uncertainty about the economy's prospects, while Polish
long-dated paper also weakened after a bond auction.
The region's currencies were little changed as investors
adopted a wait-and-see stance towards ongoing concerns over
Ireland's debt and its impact on the region's reference
currency, the euro.
The Polish finance ministry placed 3.0 billion zlotys in
10-year bonds maturing in 2020 with the average yield 32 basis
points higher compared to the previous tender on September 15.
[].
Yields on the paper rose some 5 basis points on the
secondary market after the auction.
"The tender wasn't that bad, but the market is now too weak
to go higher than the auction's results," said one Warsaw-based
dealer. "I expect such situation to persist as long as there's
no clear rebound on the core markets."
Polish bonds had strengthened on Tuesday as a batch of
dovish comments from the central bank's Monetary Policy Council
(MPC) convinced the market that it was unlikely rates would rise
at next week's sitting. []
"It seems now that there will be no rate hikes in November,
only next year, but the market is already pricing in next year's
rate increases," the dealer said.
Hungarian bonds were also weaker, with bond yields rising
some 5-10 basis points across the curve.
The minutes of Hungary's central bank showed on Wednesday,
the decision to leave rates flat for the 6th consecutive month
in October at 5.25 percent was backed by five of seven
rate-setters.
But the bank also said the impact of government moves to
plug holes in the budget with new taxes was uncertain, and they
could strengthen upside risks to inflation and make the
investment climate less predictable. []
IMPACT FROM GREECE WAS WORSE
Ireland's debt woes have hurt central European assets over
the past few sessions, but to a lesser extent than during the
Greek crisis in April-May, when spillover risk was clearer due
to Greek banking exposure in the region.
Some investors place emerging Europe's assets in a similar
risk category to euro zone peripherals, due to high fiscal
imbalances and a slow policy response to them.
At 1416 GMT, the Polish zloty <EURPLN=>, was 0.2 percent
weaker against the euro. The Hungarian forint <EURHUF=> fell 0.1
percent, while Romania's leu <EURRON=> was flat and the Czech
crown <EURCZK=> added 0.1 percent.
A Budapest-based dealer said the forint could fall to 280
per euro, its lowest since Sept. 24, if fallout from Irish woes
weaken it past October's low of 278.30.
"Normally we see strong upside reaction in emerging Europe
crosses versus the EUR," said Simon Quijano-Evans of Cheuvreux.
"However, this time around it is more of a euro
zone-specific issue, as reflected in the relatively subdued
reaction of EME (emerging Europe's) currencies to the latest
downside action in EUR/USD."
BNP Paribas said a reopening of talks on the sale of utility
Enea <ENAE.WA> with at least one more bidder alongside the
country's richest man, Jan Kulczyk, reignited expectations of
hard currency inflows. [] That could help the zloty
and support the long PLN/HUF position.
Czech markets were closed for a national holiday.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.606 24.627 +0.09% +6.96%
Polish zloty <EURPLN=> 3.96 3.953 -0.18% +3.64%
Hungarian forint <EURHUF=> 277.41 277.11 -0.11% -2.54%
Croatian kuna <EURHRK=> 7.391 7.388 -0.04% -1.11%
Romanian leu <EURRON=> 4.294 4.294 0% -1.32%
Serbian dinar <EURRSD=> 107.02 106.74 -0.26% -10.41%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +1 basis points to 61bps over bmk*
7-yr T-bond CZ7YT=RR -2 basis points to +69bps over bmk*
10-yr T-bond CZ9YT=RR -1 basis points to +86bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -1 basis points to +366bps over bmk*
5-yr T-bond PL5YT=RR -3 basis points to +354bps over bmk*
10-yr T-bond PL10YT=RR +5 basis points to +317bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +12 basis points to +583bps over bmk*
5-yr T-bond HU5YT=RR +8 basis points to +547bps over bmk*
10-yr T-bond HU10YT=RR +8 basis points to +471bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1516 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, Writing by Marius Zaharia;
Editing by John Stonestreet)
