* Forint extends gains after dollar bond
* Crown loses after rates kept on hold, hike looks far off
* Global econ data watched
(Adds bonds, stocks, updates prices)
By Jason Hovet
PRAGUE, March 25 (Reuters) - The forint held onto a 10-month
high on Friday after Hungary placed dollar bonds with
international investors amid optimism over fiscal reforms, while
the Czech crown continued to retreat.
The crown <EURCZK=> has weakened since the central bank left
interest rates at record lows on Thursday, dashing some bets
that Czech policymakers would follow Poland and Hungary in
tightening monetary policy. []
The focus on rates in the region now shifts to Hungary,
where a revamped monetary policy council, expected to pay more
attention to the government's demands that it do more to support
growth, will meet for the first time on Monday.
Analysts expect no change to rates, which rose by 75 basis
points from November to January, and they are also now confident
the new council, dominated by government appointees, will not
reverse those rises in borrowing costs. []
But there are signs that the bank could consider easing
monetary policy by taking steps to provide extra liquidity to
the economy -- potentially posing a risk for the forint.
The forint <EURHUF=>, the region's best performer in the
past week with a 2.7 percent rise, was bid up 0.1 percent at
266.69 to the euro by 1016 GMT, holding around a high last seen
in May last year.
Dealers said it was supported by more risk appetite and
after the country's successful dollar bond sale on Thursday,
when it sold to international investors at prices that were
better than initial guidance. []
"I don't know how much longer this rally could last given
how much we have firmed over the past days," a Budapest-based
currency dealer said.
"The time may be ripe for a little correction, however, the
fresh euro/Swiss franc levels indicate there is some improvement
in risk appetite, so we may be headed for new highs."
DATA TO GIVE CUES
Dealers said markets would look to economic data from
Germany <ECONDE> and the United States <ECONUS> later in the day
for more trading cues.
Germany is a major trade partner for central Europe's
export-reliant economies such as the Czech Republic and Hungary.
On Friday, a closely watched survey showed German business
sentiment fell less than expected in March. []
The crown <EURCZK=> dipped less than 0.1 percent to near a
1-1/2 week low, while the Polish zloty <EURPLN=> inched down 0.1
percent and the Romanian leu <EURRON=> gained that amount.
Stock markets rose, led by Bucharest <> with a 1.4
percent gain.
Central European currencies tend to track the euro, which
steadied on Friday following a European agreement on Thursday to
increase the euro zone's financial rescue fund, while avoiding
discussion of Portugal, which is under pressure to seek a
bailout. []
In Poland, bond yields ticked lower. Czech fixed income
markets were steady.
Markets there have priced in a first Czech rate hike by
mid-year, but the central bank on Thursday did not give any
indication that it would rush to tighten policy. This could keep
some pressure on the safe-haven crown, which had been a top
performing central European currency until last month.
"The comments from Governor Miroslav Singer did not bring
anything surprising and merely confirmed that the Czech central
bank is in no hurry to change the current interest rate
setting," Danske Bank said.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.517 24.515 -0.01% +1.97%
Polish zloty <EURPLN=> 4.021 4.018 -0.07% -1.57%
Hungarian forint <EURHUF=> 266.69 266.82 +0.05% +4.23%
Croatian kuna <EURHRK=> 7.384 7.383 -0.01% -0.05%
Romanian leu <EURRON=> 4.088 4.092 +0.1% +3.55%
Serbian dinar <EURRSD=> 103.39 103.46 +0.07% +2.45%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -4 basis points to 3bps over bmk*
7-yr T-bond CZ7YT=RR -2 basis points to +61bps over bmk*
10-yr T-bond CZ9YT=RR -1 basis points to +65bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -5 basis points to +325bps over bmk*
5-yr T-bond PL5YT=RR -5 basis points to +321bps over bmk*
10-yr T-bond PL10YT=RR -3 basis points to +300bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1112 CET.
Currency percent change calculated from the daily domestic close
at 1700 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet; Editing
by Susan Fenton)
