* Poland holds rates at 3.50 pct as expected
* FX give back gains as resistance strong
* Germany's Ifo sentiment index seen as mediocre
(Adds Polish rate decision)
By Marton Dunai and Marius Zaharia
BUDAPEST/BUCHAREST, Aug 26 (Reuters) - The Polish zloty was
little moved after the central bank left rates flat as expected
on Wednesday and tracked its peers to trade weaker after a
recent rally hit strong resistance at key levels.
Poland's central bank kept its benchmark rate unchanged at
3.5 percent, in line with market expectations that policymakers
would hold fire as the economic outlook improves and inflation
remains high. []
"Incoming data from the global economy suggests the
recession is likely over," said Jacek Wisniewski of Raiffeisen
Bank. "As for Poland the data shows the slowdown is likely to be
smaller than previously expected. I will look carefully for any
signs in the statement suggesting the end of an easing bias."
The Polish zloty <EURPLN=>, which led morning gains, was 0.3
percent weaker on the day at 1141 GMT, in line with the Czech
crown <EURCZK=> and the Hungarian forint <EURHUF=> which also
lost 0.3-0.5 percent.
The crown touched its highest level to the euro since Dec. 1
on Wednesday and dealers said 25.250 was too strong to be broken
today. The forint faced resistance close to 265, and the zloty
fell before reaching 4.05 on technical factors as well.
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."
Local stock markets were mostly 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 yields were up some 1-3 basis points across the
curve and the market awaits for comments from the central bank
following the decision.
"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 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=> 25.422 25.341 -0.32% +5.24%
Polish zloty <EURPLN=> 4.095 4.081 -0.34% +0.49%
Hungarian forint <EURHUF=> 267.87 266.6 -0.47% -1.61%
Croatian kuna <EURHRK=> 7.318 7.318 0% +0.64%
Romanian leu <EURRON=> 4.217 4.211 -0.14% -4.8%
Serbian dinar <EURRSD=> 93.251 93.147 -0.11% -4.04%
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 1441 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Marton Dunai and Marius Zaharia, Editing by
...)
