* Hungary c.bank cuts rates 25 bps as expected
* Greek bailout talk lifts markets
* Zloty touches 13-month high, stocks rise
(Adds Hungary rate cut, Romania T-bill auction)
By Jason Hovet
PRAGUE/BUCHAREST, Feb 22 (Reuters) - The Polish zloty hit a
more than 13-month high on Monday as speculation of a quick
bailout for Greece boosted emerging European assets, keeping the
Hungarian forint stronger despite a rate cut.
Hungary's central bank cut its key interest rate by 25 basis
points to a record low of 5.75 percent as expected on Monday,
[], but analysts say the bank may only have room
for one more cut before risks associated to elections in April
halt the easing cycle.
The forint showed little reaction and remained firmer on the
day as markets were buoyed by a German media report on Saturday
that Germany has sketched a plan in which euro zone countries
would provide up to 25 billion euros aid to debt-laden Greece.
[] Germany on Monday however said it had made no
decision on aid for Greece. []
Greece's problems have rattled markets this year and raised
volatility in central Europe, tempering gains for the region's
currencies which have gained more than 2 percent this year.
"The (rate) decision ... was expected but some more
uncertainty was in place this time given the
higher-than-expected inflation in January combined with the
continued red alert on Greek-related risk aversion," said
Stanislava Pravdova of Danske Bank.
"Nonetheless, looking ahead the room for further monetary
easing is very limited in our view."
By 1325 GMT, the zloty <EURPLN=> was bid 0.6 percent higher
at 3.959 to the euro, after trading at its strongest since
January 2009 at 3.9545 earlier. The forint <EURHUF=> was up 0.4
percent, while the Czech crown <EURCZK=> was down by a touch.
Warsaw stocks <> rose more than half a percent and
other central European bourses also tracked a rise in global
markets, but were off morning highs.
BETTER DEBT POSITION
Romania's leu <EURRON=> was a touch higher at 4.117 to the
euro on Monday after getting International Monetary Fund
approval late on Friday for a $3.32 billion aid payment.
Analysts said that aid would support the leu. []
Yields also fell further at a one-year Romanian treasury
bill tender on Monday as sentiment improved on news of the
resumption in IMF aid. [].
The 7.15 percent average yield is down from 7.48 percent at
a similar tender earlier this month and a maximum accepted 10
percent across the board, during a political crisis last year.
Shorter-dated Hungarian bonds gained on the day, with the
yield on the three-year paper at a 2-1/2 month low <HU3YT=RR>.
Analysts say central European states are in better fiscal
shape than shakier euro zone states like Greece.
The Czech Republic, Poland and Romania have lower public
debt-to-GDP ratios than the euro zone average, while Hungary's
80 percent debt-to-GDP ratio is average.
Economic recovery fuelled by rising exports to the Western
markets is expected to boost currencies this year, led by the
Polish zloty. Poland was the only EU state to avoid recession
last year.
Markets expect Hungary and Romania to lower interest rates
further this year to stimulate growth. The Czech Republic and
Poland are also seen raising rates in the second half of 2010
after cutting them to all-time lows last year.
In the wider region, Serbia's central bank kept its key
policy rate on hold on Monday, for the second consecutive month,
as the dinar <EURRSD=> fell to new lows pressured by importers'
demand for hard currencies. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.728 25.702 -0.1% +2.29%
Polish zloty <EURPLN=> 3.959 3.983 +0.61% +3.66%
Hungarian forint <EURHUF=> 269.8 270.78 +0.36% +0.2%
Croatian kuna <EURHRK=> 7.292 7.285 -0.1% +0.24%
Romanian leu <EURRON=> 4.124 4.127 +0.07% +2.75%
Serbian dinar <EURRSD=> 99.02 98.76 -0.26% -3.17%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -5 basis points to 80bps over bmk*
7-yr T-bond CZ7YT=RR +1 basis points to +123bps over bmk*
10-yr T-bond CZ10YT=RR -5 basis points to +101bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +1 basis points to +390bps over bmk*
5-yr T-bond PL5YT=RR 0 basis points to +321bps over bmk*
10-yr T-bond PL10YT=RR -1 basis points to +280bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -3 basis points to +536bps over bmk*
5-yr T-bond HU5YT=RR -1 basis points to +489bps over bmk*
10-yr T-bond HU10YT=RR 0 basis points to +442bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1525 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet and
Marius Zaharia; Editing by Ruth Pitchford/Susan Fenton)
