* Currencies supported by global mood
* Polish retail sales data slightly weaker but zloty unmoved
* Romania's leu stuck in ranges due to political tensions
(Updates throughout)
By Dagmara Leszkowicz and Marius Zaharia
WARSAW/BUCHAREST, Oct 23 (Reuters) - Central European
currencies were mostly stable on Friday, as global sentiment
offset Polish data showing rising unemployment and weak retail
sales that provided more proof of a sluggish regional recovery.
Polish retail sales rose by 2.5 percent on the year in
September, less than expected, while unemployment edged up to
10.9 percent [].
The start of the earnings season brought positive results
which bolstered local equities, with Warsaw's WIG20 <>
index up around 2 percent and leading regional gains.
Hungary's markets were closed on Friday for a holiday and
the forint <EURHUF=> was an inch down at 265.8 per euro at 1410
GMT. The central bank's deputy governor Julia Kiraly said the
bank might lower interest rates further from the current 7
percent to help underpin the economy. []
Speaking in Prague, she also said she expected
non-performing loans to peak at around 10 percent in the first
half of next year.
The Polish zloty <EURPLN=> was almost flat, while the Czech
crown <EURCZK=> was 0.3 percent up. Dealers said currencies were
positioned on a stronger footing for next week.
"I think the rally will continue (next week). In general, in
the U.S., pretty much all companies beat expectations this
earnings season," one dealer said. "However, risk trade is a bit
overcrowded. Any bad news will instantly trigger profit taking."
Romania's leu <EURRON=> was stuck at around 4.29 to the
common currency as political tensions that started after a
government collapse earlier this month remained in focus.
The International Monetary Fund said on Thursday it would
start a second review of Romania's aid package later this month,
relenting on previous plans to postpone the mission until a new
government was formed. []
However, the IMF mission chief for Romania, Jeffrey Franks,
said that a follow-up mission may be needed due to "ongoing
political developments".
Elsewhere on the domestic side, the lower house of the Czech
parliament approved the 2010 state budget draft in the first out
of three readings on Friday, locking in a 162.7 billion crown
deficit. []
DIFFERENT DIRECTIONS
Currencies stabilised after previous session's losses on
Friday, at the end of a less volatile week when investors
differentiated between the countries' fundamentals, monetary
policy prospects and political risk.
The zloty, seen outperforming in the longer run due to
Poland's better fundamentals gained 0.8 percent this week, while
the forint gained 0.6 percent as some investors price in less
rate cuts than before.
The crown lost 0.4 percent over the past week, while the leu
was petrified by fears of central bank interventions as
political woes prevented the unit from firming.
The week ended without solving Romania's political
uncertainties, that observers say are likely to last until after
Nov. 22 presidential elections as a majority in parliament said
will oppose Prime Minister designate Lucian Croitoru.
On Friday, markets shrugged off another wobble for Latvia's
lat, which weakened again to the central bank's intervention
level as markets eye the coalition government's efforts to draw
up the 2010 budget and any signs of further political tensions.
Latvia has been at the centre of the financial maelstrom
sweeping central and eastern Europe over the past year as the
government tries to maintain the lat currency's peg to the euro
in the face of deep recession.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.867 25.951 +0.32% +3.43%
Polish zloty <EURPLN=> 4.175 4.172 -0.07% -1.44%
Hungarian forint <EURHUF=> 266.4 265.78 -0.23% -1.07%
Croatian kuna <EURHRK=> 7.217 7.215 -0.03% +2.05%
Romanian leu <EURRON=> 4.287 4.288 +0.02% -6.36%
Serbian dinar <EURRSD=> 93.01 93.123 +0.12% -3.8%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +10 basis points to 87bps over bmk*
7-yr T-bond CZ7YT=RR -4 basis points to +88bps over bmk*
10-yr T-bond CZ10YT=RR -6 basis points to +81bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR 0 basis points to +357bps over bmk*
5-yr T-bond PL5YT=RR -1 basis points to +307bps over bmk*
10-yr T-bond PL10YT=RR -2 basis points to +276bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1510 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, Writing by Dagmara Leszkowicz
and Marius Zaharia; editing by Patrick Graham/Victoria Main/Andy
Bruce)
