* Czech cbank holds rates as expected, crown steady
* Polish bonds ease on rate hike concerns
(Updates with Czech rate decision)
By Dagmara Leszkowicz and Marius Zaharia
WARSAW/BUCHAREST, June 23 (Reuters) - The crown was steady on Wednesday as the Czech central bank left interest rates unchanged, while other central European currencies slipped as recent risk appetite faded.
The Czech central bank left its benchmark rate on hold at an all-time low of 0.75 percent as expected and most analysts expect the first hike in the first part of 2011. [
]Positive expectations for fiscal discipline following a centre-right win election win is also expected to be a factor in keeping interest rates low.
"Since the last ... meeting, a string of data has developed in a pro-inflationary direction in relation to the central bank's assumptions," said Raiffeisen Bank analyst Michal Brozka.
"On the other hand, chances for fiscal austerity have risen, which is an argument to keep rates low for a longer period."
The crown <EURCZK=> traded 0.1 percent up on the day at 1141 GMT, holding below the 25.8 per euro psychological level, which dealers see providing strong resistance against any weakening.
But the Hungarian forint <EURHUF=> and the Polish zloty <EURPLN=> were 0.4-0.5 percent weaker as poor U.S. housing data added fuel to fears about the global economic recovery.
Poland's central bank is also expected to leave interest rates unchanged at a record low next Wednesday, but expectations for a bigger rate hike by the end of 2010 lifted bond yields to near their highest levels since the start of June.
"Bond yields rose some 4 basis points on Tuesday, and central banker comments on a possible rate hike added fuel to the rises," said Marek Kaczor, a dealer at PKO BP.
A member of the central bank's Monetary Policy Council, Anna Zielinska-Glebocka, told Reuters in an interview that Poland should raise rates by 50 basis points in one move in the autumn from 3.5 percent. [
]
CONCERNS PERSIST
Romania's leu <EURRON=> was a touch stronger against the euro a day ahead of an expected court ruling on austerity measures, a key factor for securing the country's IMF-led 20 billion euro aid package.
Analysts expect the cuts to pass, but the Constitutional Court has a history of overturning reform packages, making it more difficult for government to keep public spending in check.
"Naturally, there are some concerns about the ruling," said one trader in Bucharest.
Stocks in the region were also in the red on Wednesday, with Prague's bourse <
> leading losses, dragged down by Czech power producer CEZ < > which fell to two-week lows after trading for the first day without dividend rights.CEZ plans its second eurobond this year with a maximum 500 million euros offer in 10-year bonds. In April, the largest listed firm in central Europe placed a 15-year, 740 million euro bond priced at 122 basis points above mid-swaps. [
]Finance Minister Eduard Janota said after the first CEZ issue this year that it set a minimum price benchmark for the state's planned eurobond. Czech Republic delayed a eurobond issue in April due to debt market volatility.
Regional markets have been under pressure in the past months from worries of possible contagion from euro zone's debt crisis. However, the region is far from facing the same financing pressure and its currencies are seen firming this year. --------------------------MARKET SNAPSHOT-------------------- Currency Latest Previous Local Local
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today in 2010 Czech crown <EURCZK=> 25.716 25.745 +0.11% +2.34% Polish zloty <EURPLN=> 4.066 4.048 -0.44% +0.93% Hungarian forint <EURHUF=> 280.1 278.76 -0.48% -3.48% Croatian kuna <EURHRK=> 7.197 7.197 0% +1.56% Romanian leu <EURRON=> 4.221 4.224 +0.07% +0.39% Serbian dinar <EURRSD=> 103.55 103.5 -0.05% -7.41% Yield Spreads Czech treasury bonds <0#CZBMK=> 2-yr T-bond CZ2YT=RR -8 basis points to 148bps over bmk* 7-yr T-bond CZ7YT=RR -2 basis points to +162bps over bmk* 10-yr T-bond CZ9YT=RR +2 basis points to +154bps over bmk* Polish treasury bonds <0#PLBMK=> 2-yr T-bond PL2YT=RR +2 basis points to +417bps over bmk* 5-yr T-bond PL5YT=RR +2 basis points to +385bps over bmk* 10-yr T-bond PL10YT=RR +2 basis points to +318bps over bmk* Hungarian treasury bonds <0#HUBMK=> 3-yr T-bond HU3YT=RR +5 basis points to +623bps over bmk* 5-yr T-bond HU5YT=RR -10 basis points to +566bps over bmk* 10-yr T-bond HU10YT=RR +5 basis points to +490bps over bmk* *Benchmark is German bond equivalent. All data taken from Reuters at 1441 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 [
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