* FX give back gains as resistance strong
* Germany's Ifo sentiment index seen as mediocre
* Polish rates seen on hold, little impact expected
(Writes through, adds Ifo, bonds, updates market)
By Marton Dunai
BUDAPEST, Aug 26 (Reuters) - Central European currencies
gave back gains made earlier in the day as resistance levels
proved strong ahead of a Polish rate meeting, while Germany's
Ifo index did not impress the region's markets, dealers said.
The Polish zloty <EURPLN=>, which led earlier gains, was
flat at 0922 GMT, ahead of a central bank meeting later in the
day which is expected to hold Polish interest rates steady.
Germany's Ifo sentiment index, widely watched in the region
for clues about the health of Eastern Europe's biggest export
market, came out at 90.5 versus a Reuters estimate of 88.9.
"It was good, of course, but not that good," a dealer in
Budapest said. "For a continued rally we need a steady flow of
great news, which we do not have right now."
The Czech crown <EURCZK=>, which reached new 2009 highs this
week, was also flat, as were all other regional currencies.
The crown touched its highest level against the euro since
Dec. 1 on Wednesday and dealers said 25.250 could prove the next
resistance after the 25.300 level.
The forint also faces strong resistance at 265 versus the
euro, and the zloty might flirt with the 4.00 level for a while
before breaking through, dealers said.
"With surprisingly strong data from the core markets and
good sentiment on the equity markets, the zloty should today
trade at 4.05-4.10 against the euro, as long as today's data
from Germany and the U.S. does not disappoint," Polish bank BPH
analysts wrote in a morning report.
Local stock markets were mostly in lower after recent gains.
The Budapest bourse, which briefly passed the 20,000 point mark,
also slid back below that and into negative territory.
POLISH, CZECH BONDS WEAKER
Polish bonds weakened ahead of the central bank's decision
on rates with yields up some 1-3 basis points across the curve.
"Today's MPC meeting in Poland will likely have a rather
limited reaction on the Polish FX and fixed income markets,"
Danske Bank wrote in a morning note.
"The comments at the news conference could push (swap) rates
higher if the central bank signals that the monetary easing
might be over," Danske added.
Poland also announced plans to issue five-year Swiss franc
denominated bonds worth at least 250 million francs. []
Czech bonds were weaker along the curve on Wednesday,
pulling back from recent gains.
Money market rates were quiet, but were seen tracking
western peers with the strength of the crown currency having a
fading impact.
"The impact on rates seems to be limited yet as another rate
cut by CNB is not on the cards," Komercni Banka dealers said in
a note.
Hungarian bonds were little changed in a quiet market on
Wednesday morning, a dealer said.
He added that the market may have rushed ahead of itself
with interest rate cut expectations, and the central bank may
not cut rates as much and as fast as the market now believed.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.351 25.355 +0.02% +5.53%
Polish zloty <EURPLN=> 4.086 4.083 -0.07% +0.71%
Hungarian forint <EURHUF=> 266.88 266.76 -0.04% -1.25%
Croatian kuna <EURHRK=> 7.315 7.322 +0.1% +0.68%
Romanian leu <EURRON=> 4.215 4.214 -0.02% -4.76%
Serbian dinar <EURRSD=> 93.117 93.14 +0.02% -3.91%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +21 basis points to +82bps over bmk*
4-yr T-bond CZ4YT=RR +4 basis points to +145bps over bmk*
8-yr T-bond CZ8YT=RR +20 basis points to +268bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -6 basis points to +364bps over bmk*
5-yr T-bond PL5YT=RR -2 basis points to +318bps over bmk*
10-yr T-bond PL10YT=RR -3 basis points to +283bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -29 basis points to +618bps over bmk*
5-yr T-bond HU5YT=RR -60 basis points to +552bps over bmk*
10-yr T-bond HU10YT=RR -49 basis points to +479bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1122 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
(Reporting by Marton Dunai, editing by Mike Peacock and Toby
Chopra)
