* Poland agrees with Eureko to postpone PZU meeting
* Czech parties reach agreement on fiscal package
* Mkts eye Polish, Hungarian, Romanian rate moves next week
(adds fixed income, Czech agreement)
By Marius Zaharia
BUCHAREST, Sept 25 (Reuters) - The Polish zloty led losses
on Friday amid uncertainty over a possible big dividend payout,
while the Czech crown edged up as an agreement among political
parties removed the threat of a government resignation.
In Poland, the government agreed with Dutch firm Eureko
<EUREK.UL> on Thursday to postpone by a week a shareholder
meeting of Polish insurer PZU. []
Fears that Poland, which holds 55 percent of PZU, would back
it paying a 12 billion zlotys dividend and that Eureko may
convert its part into euros have weighed on the zloty this week.
"The issue of (a possible payout) is important for the
currency and surely it can affect it further," one Warsaw-based
dealer said.
Polish bonds, however, traded flat, unaffected by the
falling zloty and still benefiting from the impact of a
successful tender on Wednesday [].
In the Czech Republic, a conflict among political parties
over a savings package aimed at cutting next year's budget
deficit ended after the main leftist party dropped a demand to
raise unemployment benefits. []
Markets feared government threats that it would quit if the
package is not approved would materialise.
By 0915 GMT, the zloty <EURPLN=> had fallen 0.4 percent to
its lowest level in 10 days. The Czech crown <EURCZK=> edged up
0.1 percent, the Romanian leu <EURRON=> gained 0.2 percent and
the Hungarian forint <EURHUF=> was flat.
RATE MEETINGS IN FOCUS
Meanwhile, the Czech central bank left rates unchanged at a
record low of 1.25 percent on Thursday, in line with
expectations. But the bank made dovish comments which analysts
said left the door open to one more possible cut in November.
"Two board members did vote for a cut, which is still
possible in our view," Cheuvreux said in a note.
There are more central bank meetings in the region next
week, with Hungary and Romania expected to cut rates by 50 basis
points [] [], while Poland is seen
holding fire [].
Rate cut expectations continued to help Hungarian bonds, and
yields fell around 5 basis points.
In Romania, the leu inched up to a fresh five-week high and
tested the key 4.2 level as the government survived a
no-confidence vote on Thursday and passed key IMF-prescribed
reforms [].
"This removes political risk and suggests that fiscal
consolidation measures could be passed more easily thereby
reducing credit risks," BNP Paribas said in a note.
"Yet we have doubts about the implementation and suggest
that there will be no fiscal cuts before the presidential
elections in November."
In Albania, officials called for calm after the lek currency
<EURALL=> neared a record low against the euro, prompted by
comments a week ago from Prime Minister Sali Berisha that
Albania should adopt the common EU currency. []
But analysts saw little chance of fallout in emerging
Europe's other more liquid markets.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.171 25.206 +0.14% +6.29%
Polish zloty <EURPLN=> 4.203 4.186 -0.4% -2.09%
Hungarian forint <EURHUF=> 270.67 270.6 -0.03% -2.63%
Croatian kuna <EURHRK=> 7.273 7.263 -0.14% +1.26%
Romanian leu <EURRON=> 4.203 4.212 +0.21% -4.49%
Serbian dinar <EURRSD=> 92.83 93.197 +0.4% -3.61%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -1 basis points to 165bps over bmk*
7-yr T-bond CZ7YT=RR 0 basis points to +181bps over bmk*
10-yr T-bond CZ10YT=RR +1 basis points to +173bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -3 basis points to +386bps over bmk*
5-yr T-bond PL5YT=RR +2 basis points to +338bps over bmk*
10-yr T-bond PL10YT=RR +1 basis points to +292bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -7 basis points to +554bps over bmk*
5-yr T-bond HU5YT=RR +1 basis points to +513bps over bmk*
10-yr T-bond HU10YT=RR -4 basis points to +434bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1215 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Marius Zaharia
Editing by Andy Bruce)
