* Zloty, forint lead gains in central Europe
* Poland to cap non-fixed budget spending, debt
* Hungary unemployment stuck at 10.5 pct in Q4
* Crown unfazed by good output growth data
(Updates prices, adds Polish fiscal plan, bonds)
By Gergely Szakacs
BUDAPEST, Jan 29 (Reuters) - Hungary's forint and the Polish
zloty led gains among central European currencies on Friday,
after Poland outlined its fiscal consolidation plan in a bid to
pave the way for euro adoption.
Poland, which saw its deficit swell to 6.3 percent of the
economy last year, wants to cap its non-fixed budget spending
growth to 1 percent in real terms and ensure debt does not
exceed 55 percent of GDP, the government's fiscal plan revealed.
[]
Prime Minister Donald Tusk said the country could cut its
deficit to the European Union's 3 percent ceiling required for
euro entry by the end of 2012.
Nearby Hungary, which upgraded its GDP forecast to -0.3
percent this year from -0.6 percent, said on Thursday it
maintained its 3.8 percent/GDP deficit forecast for 2010. It had
earlier targeted a 3 percent budget gap by 2011.
At 1012 GMT, the zloty <EURPLN=> and the forint <EURHUF=>
were both 0.4 percent stronger, with dealers saying Polish GDP
data released on Thursday could provide near-term support for
the currency.
Poland, the only European Union member to avoid recession
last year, saw its economy expand 1.7 percent in 2009, just
above forecasts and raising optimism about economic performance
this year.
Gains could be short-lived, though, given a flight out of
the euro <EUR=> to the dollar given continuing concern over
Greece's ability to solve its fiscal problems, analysts said.
Hungarian and Czech bonds were little changed, with yields
trickling lower in both markets, dealers said.
RISKS
Expectations for encouraging U.S. GDP data later on Friday
were also supporting the dollar.
"Downside pressure on EUR/USD is unlikely to ease ahead of
the US GDP release and ongoing tensions in the Greek bond market
amid denials of a West European bail-out package," UniCredit
said in a note. "This alongside a shaky US/Asian equity market
backdrop should create an uneasy start for CEE markets."
U.S. economist Nouriel Roubini, who had warned that the 2008
financial crisis was coming, said on Friday there was still
significant financial fragility in the Baltics, Bulgaria,
Romania and Hungary. []
Hungary's finance ministry said on Thursday the economy
would contract by 0.3 percent this year, up from a previous
forecast for a 0.6 percent contraction, but the country would
still lag recovery of its central European peers.[]
Data released on Friday showed unemployment stayed at 10.5
percent in the fourth quarter of last year and markets expect it
to reach 11 percent before the economy picks up in the second
half. []
The Czech crown <EURCZK=> steadied from losses in the
previous session when investors were selling it to buy regional
peers like the leu <EURRON=> and the zloty, dealers said.
The crown was broadly unchanged in early trade after data
showed Czech industrial output rose 2.1 percent year-on-year in
December, the first annual increase since Sept. 2008, exceeding
market expectations. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 26.226 26.219 -0.03% +0.35%
Polish zloty <EURPLN=> 4.059 4.077 +0.44% +1.11%
Hungarian forint <EURHUF=> 270.87 272.23 +0.5% -0.19%
Croatian kuna <EURHRK=> 7.314 7.309 -0.07% -0.07%
Romanian leu <EURRON=> 4.12 4.134 +0.34% +2.85%
Serbian dinar <EURRSD=> 98.413 98.43 +0.02% -2.57%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -13 basis points to 87bps over bmk*
7-yr T-bond CZ7YT=RR -4 basis points to +130bps over bmk*
10-yr T-bond CZ10YT=RR +5 basis points to +132bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -1 basis points to +545bps over bmk*
5-yr T-bond HU5YT=RR -1 basis points to +504bps over bmk*
10-yr T-bond HU10YT=RR -1 basis points to +448bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 0916 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
(Reporting by Reuters bureaux, Writing by Gergely Szakacs;
Editing by Susan Fenton)
