* Crown up 1.7 pct, Czech bonds firm after centre-right win
* Hungary's central bank halts rate easing cycle
* Polish GDP comes in line with forecasts
(Adds Hungary's rate decision)
By Jason Hovet and Marius Zaharia
PRAGUE/BUCHAREST, May 31 (Reuters) - The Czech crown jumped
on Monday after a decisive victory for centre-right parties in a
national election convinced markets a stable and fiscally
prudent government was likely to result.
In Hungary, the forint and bonds were little moved by the
central bank's decision to halt a series of rate cuts at a
record low of 5.25 percent, in line with the majority of
forecasts [].
Three Czech centre-right parties led by the Civic Democrats
won 118 seats out of 200 in two days of voting, giving them a
comfortable majority to implement promised austerity. It was the
result investors had hoped for. []
Two of the parties agreed on priorities on Monday, a sign of
quick progress in coalition talks [].
The crown surged 1.7 percent, firming the most in more than
a year to bid at 25.44 to the euro by 1341 GMT and easily
winning back an 0.8 percent loss on Friday, when markets had
feared an election stalemate.
Bond yields dipped 2-5 basis points on longer-dated bonds,
with the benchmark 2019 bond <CZ1002471=> yield quoted at a
one-week low of 4.003 percent. Yields fall when prices rise.
"The results will be CZK supportive in the near term
although we do not think that the (Czech National Bank) would
tolerate EUR/CZK below 25.00 at this stage of the economic
cycle," UniCredit said in a note.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a Take a Look on the Czech Parliamentary Elections,
click on: []
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
FISCAL UNCERTAINTY
The forint <EURHUF=> rose 0.3 percent, unmoved by the halt
in rate cuts, which analysts said was triggered by a negative
turn in global risk appetite and uncertainty over the new
government's fiscal policy.
The unit has weakened more than 4 percent since the central
bank's last meeting and government bond yields are 70-100 basis
points above multi-year lows hit last month. That argues for
holding fire with more cuts in the premium for holding forints.
Romania's leu <EURRON=> trailed the region with a 0.7
percent dip, with markets looking wary over possible challenges
for the government's austerity plans. [].
The country announced its debt issuance plans for June, but
may struggle to find investor interest if it hesitates to
enforce painful pay cuts in its bloated state sector.
[].
Czech stocks <> rose 0.6 percent and other bourses were
mixed with U.S. and UK market holidays hitting liquidity.
The Polish zloty <EURPLN=> added 0.1 percent, little moved
by strong first quarter GDP data that was in line with
forecasts. []
Currencies in the region often track the euro/dollar, and
the euro edged up on Monday to recover some losses made
following a Fitch downgrade in Spain's credit rating on Friday.
The crown, seen as a relatively safe haven among central
Europe, leads the region this year with a 3.5 percent rise.
But it has to equal Monday's rise in the coming sessions to
match this year's high of 25.015 per euro.
Two new political parties, TOP09 and Public Affairs, would
be in the Czech coalition now in the works. Commerzbank
strategist Lutz Karpowitz said the crown could test this year's
high in the coming weeks if coalition negotiations run smoothly.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.44 25.876 +1.71% +3.45%
Polish zloty <EURPLN=> 4.076 4.081 +0.12% +0.69%
Hungarian forint <EURHUF=> 274.89 275.81 +0.33% -1.65%
Croatian kuna <EURHRK=> 7.259 7.264 +0.07% +0.69%
Romanian leu <EURRON=> 4.192 4.163 -0.69% +1.08%
Serbian dinar <EURRSD=> 102.5 102.67 +0.17% -6.46%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +1 basis points to 126bps over bmk*
7-yr T-bond CZ7YT=RR -4 basis points to +155bps over bmk*
10-yr T-bond CZ9YT=RR 0 basis points to +137bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +1 basis points to +546bps over bmk*
5-yr T-bond HU5YT=RR +1 basis points to +513bps over bmk*
10-yr T-bond HU10YT=RR +1 basis points to +453bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR 0 basis points to +412bps over bmk*
5-yr T-bond PL5YT=RR +3 basis points to +370bps over bmk*
10-yr T-bond PL10YT=RR +3 basis points to +311bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +9 basis points to +487bps over bmk*
5-yr T-bond HU5YT=RR +10 basis points to +429bps over bmk*
10-yr T-bond HU10YT=RR +10 basis points to +384bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1641 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 Jason Hovet and
Marius Zaharia; editing by Patrick Graham)
