* Currencies gain ahead of ECB, G20
* FX off morning highs as players book profits
* Czech, Polish debt auctions continue to help
* Global mood improves on U.S. and UK data
(adds background, fixed income, changes prices)
By Marius Zaharia
BUCHAREST, April 2 (Reuters) - Central European currencies
extended gains on Thursday, led by the Polish zloty and the
Hungarian forint as the success of Wednesday's debt tenders
continued to help and U.S. data sparked some hope for investors.
Global risk appetite was boosted by U.S. factory and home
sales data released late on Wednesday, which spurred optimism
that the U.S economy has bottomed out, while house prices in
Britain posted their first rise since 2007.
In the region, stocks continued to climb, while well-bid
Czech and Polish debt auctions on Wednesday prompted investors
to turn more bullish after central European debt markets were
under pressure for months.
Market talk on Wednesday that the ECB may intervene to help
the currencies of EU's emerging markets also continued to give
support, dealers said, although analysts said this move was
unlikely to happen.
"Data in U.S. and UK, hopes for ECB helping the region and
the debt auctions give strong support," one dealer said.
"Bullish is the word for the markets today."
By 0736 GMT, the Polish zloty <EURPLN=> and the Hungarian
forint <EURHUF=> were leading regional gains, adding around 1.7
and 1.4 percent, respectively, from Wednesday's domestic close.
The Czech crown <EURCZK=> firmed some 1.1 percent and the
Romanian leu gained 0.2 percent.
But currencies were slightly off morning highs as dealers
said some players were taking their profits, and investors were
also eyeing an ECB meeting later in the day and the results of a
Group of 20 meeting in London.
"Even though the overall results of the G20 summit are
limited, effects for the EMEA currencies are likely to be
positive," Commerzbank said in a morning note.
"It is likely that the summit will agree to an increase of
IMF funds to the level required by the IMF of $250 billion."
In contrast with the improved sentiment globally, the
outlook for regional assets remained gloomy, with concerns over
a deepening recession in some of the countries and worries about
high foreign debt still mounting.
While regional assets were rising, credit ratings agency
Moody's issued ratings downgrades on two of Austria's biggest
banks exposed to emerging Europe on Wednesday, following up on a
warning that rattled emerging European markets in February.
Moreover, Czech Republic and Hungary have been hit by a fall
of governments and Budapest suffered downgrades by S&P and
Moody's this week, adding weakening pressure on regional assets.
"We'll see how long global hopes will offset the negative
outlook in the region," one currency dealer in Bucharest said.
Bonds strengthened slightly across the region helped by
improved sentiment, but dealers were still worried over supply
concerns with upcoming auctions.
"Czech bonds look cheap, but forthcoming issuance makes us
stand by our call for widening ASW spreads to continue,"
Komercni Banka traders said in a note.
On Wednesday, the Czech Republic sold more than it offered
at an auction of 15-year bonds [], but rising yields
were less positive and Hungary continued to buy back its bonds
to help its market which remains almost frozen [].
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.87 27.165 +1.1% -0.44%
Polish zloty <EURPLN=> 4.489 4.563 +1.65% -8.33%
Hungarian forint <EURHUF=> 299.74 303.9 +1.39% -12.07%
Croatian kuna <EURHRK=> 7.456 7.455 -0.01% -1.22%
Romanian leu <EURRON=> 4.216 4.224 +0.19% -4.78%
Serbian dinar <EURRSD=> 94.288 94.682 +0.42% -5.1%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +32 basis points to 236bps over bmk*
4-yr T-bond CZ4YT=RR -25 basis points to +259bps over bmk*
8-yr T-bond CZ8YT=RR -3 basis points to +333bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -7 basis points to +426bps over bmk*
5-yr T-bond PL5YT=RR -7 basis points to +373bps over bmk*
10-yr T-bond PL10YT=RR -5 basis points to +321bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -22 basis points to +1039bps over
bmk*
5-yr T-bond HU5YT=RR -22 basis points to +971bps over bmk*
10-yr T-bond HU10YT=RR -22 basis points to +854bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1155 CET.
Currency percent change calculated from the daily domestic
close at 1500 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 []
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(Reporting by Reuters bureaus, writing by Marius Zaharia,
Editing by Andy Bruce)
