* Hungarian assets in favour after govt fiscal package
* Share markets gain along with risk appetite
* Polish inflation, Czech rates, Romania growth eyed
(Adds bonds, fresh comments, updates market)
By Gergely Szakacs and Marton Dunai
BUDAPEST, April 20 (Reuters) - Hungarian assets rallied on
Wednesday as investors favoured the forint over the Polish zloty
in a generally risk-friendly market that also saw gains for the
region's stocks.
Hungary's currency, which has been trending higher since the
government announced more details of its fiscal reform package
last Friday, rose three quarters of a percent against the euro
by 0949 GMT <EURHUF=> after breaking through a key resistance
level, while government bonds also rose. []
Investors were also focused on Polish core consumer
inflation data due out later in the day and the zloty <EURPLN=>
gained 0.2 percent.
Hungary's bond yields dropped by about 20 basis points from
Tuesday, with the long end of the curve dipping below 7 percent,
near 2011 highs, while other bonds in the region were broadly
flat.
The Czech crown <EURCZK=> and the Romanian leu <EURRON=>
were little changed.
"The long zloty/forint squeeze is pretty strong right now,
plus we broke through the 265 (forint/euro) technical level,
with the next stop at 262-263," a dealer in Budapest said.
Stock markets across central Europe also rose, led by the
Budapest blue chip index <>, which added 1.9 percent, while
stocks in Bucharest <> and Warsaw <> each gained 1
percent and Prague <> was up 0.3 percent by 1008 GMT.
Although the bull market was strongest in Hungary, analysts
said the zloty <EURPLN=> could also strengthen further in the
coming days on growing appetite for risk globally.
The Polish Economy Minister said growth could reach 4.5
percent in the first quarter, which would mean a likely fall in
unemployment. []
"The zloty could strengthen against the basket of currencies
on the wave of global tendencies, it should fluctuate around
3.95-3.97 against the euro," Bank Pekao analysts wrote in their
daily report.
Investors will closely watch Polish inflation data due at
1200 GMT. The figure is expected to have risen to 1.8 percent on
an annual basis from 1.7 percent reported for February.
CZECH CRISIS EASES
Monday's easing of a political crisis in the Czech Republic
benefited the crown, though the government still faces a
no-confidence vote initiated by the leftist opposition, which
will be held just after the Easter break on April 26.
"We view the government's status quo as market positive. The
no-confidence vote will be hard to pass, as the opposition would
need the support of 19 rebels from the coalition parties," said
Pavel Sobisek, an analyst in UniCredit.
Czech interest rates remain at record lows and though an
increase is on the cards, the precise timing is not yet clear, a
rate setter said on Wednesday. []
Dealers said the leu was set to test resistance at about
4.0710-4.0720 per euro, around the one-year highs it hit last
month, after a World Bank report said Romania would lead
economic growth among the newer European Union members in 2012.
[]
Markets are looking for some indication of the central
bank's preferred range for the leu after it said last month a
strengthening of the currency -- which has risen more than 3
percent this year -- was backed by economic fundamentals.
Analysts said that amounted to a verbal intervention because
a stronger currency could help tame inflation fuelled by surging
food and energy prices and reduce the need for a rate hike.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.145 24.143 -0.01% +3.54%
Polish zloty <EURPLN=> 3.964 3.97 +0.15% -0.15%
Hungarian forint <EURHUF=> 263.7 265.65 +0.74% +5.42%
Croatian kuna <EURHRK=> 7.359 7.354 -0.07% +0.29%
Romanian leu <EURRON=> 4.085 4.083 -0.05% +3.62%
Serbian dinar <EURRSD=> 101.16 101.11 -0.05% +4.71%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -1 basis points to -15bps over bmk*
7-yr T-bond CZ7YT=RR -5 basis points to +39bps over bmk*
10-yr T-bond CZ9YT=RR -1 basis points to +67bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -15 basis points to +317bps over bmk*
5-yr T-bond PL5YT=RR -3 basis points to +313bps over bmk*
10-yr T-bond PL10YT=RR -3 basis points to +282bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -24 basis points to +430bps over bmk*
5-yr T-bond HU5YT=RR -22 basis points to +409bps over bmk*
10-yr T-bond HU10YT=RR -21 basis points to +366bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1149 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaux; Writing by Gergely Szakacs;
Editing by Toby Chopra, John Stonestreet)
