* Polish bonds weaken, zloty may gain later in week
* Czech yields steady after rate hike noise
* Analysts say Romania's Sept debt plan tough sell
By Marius Zaharia and Jason Hovet
BUCHAREST/PRAGUE, Aug 30 (Reuters) - Polish bond prices
dipped on Monday after strong GDP data and news the central bank
had held a vote on whether it was ready to raise rates yet,
while hawkish comments did little to stop a Czech bond rally.
In Hungary, the forint extended afternoon losses after Prime
Minister Viktor Orban said it was in the country's interest to
sign loan agreements with the IMF if necessary, but not to have
economic policy agreements with the Fund. []
Poland's economy expanded 3.5 percent year-on-year in the
second quarter -- above a forecast 3.2 percent and up from 3.0
percent in the first three months of the year. []
Analysts said domestic demand bodes well for Poland's
resilience to a recovery slowdown expected in western European
trade partners, and the data also supported already-held
expectations for monetary tightening later this year.
Polish rate setter Anna Zielinska-Glebocka was quoted by PAP
news agency on Monday as saying the council took the possibility
of raising rates as far as a vote at its August meeting.
[]
"This (vote news) was a fairly big surprise considering
current inflation. This changed rate expectations," said Pawel
Bialczynski, a fixed income dealer at BRE Bank.
Polish bond yields rose around 2 basis points on the day.
The zloty <EURCZK=>, though, slipped 0.3 percent to 3.983
per euro, as emerging European currencies came off gains at the
end last week and trade slowed due to a London market holiday.
But dealers said the zloty could rise this week in reaction
to the data when inflows from foreign investors gather pace.
Official forecasts show Poland's economy is set to outpace
peers again this year after being the only European Union
country to avoid recession last year.
CZECH YIELDS
Yields for shorter-dated Czech paper were steady on the day
after a third member of the central bank's seven-member policy
board spoke in favour of a rate hike. []
Robert Holman told weekly Tyden the bank would likely raise
the main rate by 25 basis points at the end of this year or
early 2011.
Czech bond markets were unmoved. Bonds have rallied this
summer, tracking developments in the west while getting backing
from government austerity pledges. Long-end yields have dropped
as much a percentage point to lifetime lows since June, and
dealers said good bids can still be found. <CZ1002471=>
The Czech 2-year interest rate swap <CZKAM6PR2Y=> has
already ticked up from a 3-month low last week, continuing a
trend of a flattening curve started during this month.
The Czech crown <EURCZK=> dropped 0.5 percent to 24.813 to
the euro by 1444 GMT. The Hungarian forint <EURHUF=> lost 0.4
percent on the day, dipping lower after PM Orban's comments.
Orban's government shunned new IMF help this summer.
"It's a negative thing that they again say that we don't
need an IMF agreement," a Budapest-based dealer said.
Romania's leu <EURRON=> was flat, outperforming and helped
by a "relatively big" corporate order, dealers said.
Romanian plans to sell 4.6 billion lei ($1.4 billion) in leu
currency bills and bonds in September, but the market expects
the state to have trouble finding demand at an affordable price.
Yield costs have been on the rise since early May, when
uncertainty resurfaced over Romania's ability to enforce fiscal
tightening, needed to keep alive a 20 billion euros aid package
led by the International Monetary Fund. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.813 24.698 -0.46% +6.07%
Polish zloty <EURPLN=> 3.983 3.972 -0.28% +3.04%
Hungarian forint <EURHUF=> 284.00 282.95 -0.37% -4.81%
Croatian kuna <EURHRK=> 7.268 7.28 +0.17% +0.57%
Romanian leu <EURRON=> 4.24 4.24 0% -0.06%
Serbian dinar <EURRSD=> 104.953 104.963 +0.01% -8.64%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +9 basis points to 117bps over bmk*
7-yr T-bond CZ7YT=RR +5 basis points to +114bps over bmk*
10-yr T-bond CZ9YT=RR +7 basis points to +114bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +8 basis points to +405bps over bmk*
5-yr T-bond PL5YT=RR +10 basis points to +394bps over bmk*
10-yr T-bond PL10YT=RR +8 basis points to +328bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +6 basis points to +635bps over bmk*
5-yr T-bond HU5YT=RR +6 basis points to +599bps over bmk*
10-yr T-bond HU10YT=RR +3 basis points to +517bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1645 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 Patrick Graham, John Stonestreet, Ruth Pitchford)
