* Zloty extends rally, boosted by hawkish rate comments
* Serb cbank holds rates at 9.5 pct, sells euros on mkt
* U.S. payroll data lift recovery hopes, risk appetite
(Adds Serb cbank, US data, bonds)
By Dagmara Leszkowicz and Krisztina Than
WARSAW/BUDAPEST, March 5 (Reuters) - East Europe's currencies
firmed on Friday with the zloty at 15-month highs after hawkish
comments on rates from a central banker, while encouraging U.S.
jobs data lifted recovery hopes and global risk appetite.
The dollar rose against the euro, shares opened higher in
the United States and rallied in Europe after non-farm payroll
data showed employers cut fewer jobs than expected in February.
This contributed to continued positive sentiment towards
central and eastern European currencies and markets.
The zloty has firmed almost two percent against the euro
over the past week, while the Czech crown and the forint gained
about one percent.
"The U.S. job figures were better than expected and yields
dropped by a few basis points (from morning levels)," one
Budapest-based fixed income trader said. "Sentiment is better,
risk appetite is higher."
Central Europe's emerging markets have enjoyed a relatively
strong run this year and have drawn support from the positive
reaction of investors to Greece's latest austerity measures.
"It is even possible that the newsflow on Greece highlighted
the relative advantages of the (CEE) region," Erste said in its
weekly regional market outlook. "Public debt is a fraction and
fiscal deficits are below or at most at the EMU average and
yield pick-ups are in most instances attractive."
The zloty <EURPLN=>, the region's best performer, has gained
almost 6 percent against the euro in the last two months and was
up 0.7 percent from Thursday at 1403 GMT. The forint <EURHUF=>
and the Czech crown <EURCZK=> both gained about 0.3 percent.
Dealers attributed the zloty's sharper gains partly to
comments from Monetary Policy Council (MPC) members.
A new MPC member, Elzbieta Zielinska-Glebocka, said on
Thursday the central bank was likely to raise rates in two small
steps in the second half or by year end. []
Central bank Governor Slawomir Skrzypek -- long considered a
supporter of a relatively softer monetary policy -- said this
week the MPC should consider raising rates in light of the
bank's recent inflation projection for the next two years.
Others have warned against moving prematurely, however, and
predictions that inflation will fall well below the bank's 2.5
percent target later this year support the case for holding fire
on rates to support the economic upturn.
A Reuters poll showed the Polish unit could firm further
against the euro over the next year, leading its peers as
economies in the region start recovering. []
Romania's leu <EURRON=> and Serbia's dinar <EURRSD=> were
unchanged on Friday.
Serbia's central bank left its key policy rate unchanged at
9.5 percent against expectations for a 25 bps cut and sold euros
on the market shortly after the decision to lift the dinar.
Romanian dealers said the leu remained rangebound after
central bank Governor Mugur Isarescu said he was concerned the
currency could rise too far. []
The Czech crown got a lift from the U.S. data, and dealers
said the latest rally with the crown still had some steam.
HUNGARIAN BONDS EXTEND GAINS
Hungarian bonds, which have enjoyed a renewed rally in the
past month, firmed on Friday helped by positive regional
sentiment and hopes for a further interest rate cut.
"With the forint at such strong levels, expectations have
come back that the central bank will have room to cut its
interest rates once more, in March ... Yields can go further
down next week," a Budapest-based trader said.
The Reuters poll showed, however, the forint could weaken in
the next three months on uncertainty over the next government's
policies after April's elections, in which the main opposition
party Fidesz is expected to oust the ruling Socialists.
Czech bonds were mixed, with the yield on the 10-year paper
<CZ10YT=RR> flat after touching a two-month low this week.
The region's bonds have proved quite resilient to Greek
worries.
A Polish deputy finance minister said on Thursday the
country would sell dollar bonds worth up to $1.5 billion in the
second quarter after it successfully placed 3 billion euros in
15-year paper in January. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.708 25.793 +0.33% +2.37%
Polish zloty <EURPLN=> 3.872 3.899 +0.7% +5.99%
Hungarian forint <EURHUF=> 266.04 266.78 +0.28% +1.62%
Croatian kuna <EURHRK=> 7.262 7.269 +0.1% +0.65%
Romanian leu <EURRON=> 4.088 4.088 0% +3.65%
Serbian dinar <EURRSD=> 99.67 99.67 0% -3.8%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +13 basis points to 96bps over bmk*
7-yr T-bond CZ7YT=RR -3 basis points to +119bps over bmk*
10-yr T-bond CZ10YT=RR -5 basis points to +95bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -3 basis points to +521bps over bmk*
5-yr T-bond HU5YT=RR -4 basis points to +457bps over bmk*
10-yr T-bond HU10YT=RR -5 basis points to +421bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1502 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
For related news and prices, click on the codes in brackets: All
emerging market news []
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(Reporting by Reuters bureaus, Writing by Dagmara Leszkowiczand
Krisztina Than; Editing by Susan Fenton, John Stonestreet)
