* Zloty hits fresh highs, other FX mostly stronger after PMI
* Czechs give bond issuance plan for Q2, bonds unmoved
(Adds fixed income, detail)
By Dagmara Leszkowicz
WARSAW, March 1 (Reuters) - Poland's zloty hit 14-month
intraday highs on Monday and other currencies in the region also
edged up as an expanding manufacturing sector and signs Greece's
debt crisis could be easing boosted investor appetite.
The Purchasing Managers' Index (PMI) for Poland bounced back
to 52.4 points last month from 51.0 in January, showing the
country's economy regained momentum. In Hungary the index rose
to 55.9 points and in the Czech Republic to 54.3 points.
[]
The data also showed manufacturing activity in the euro zone
-- the region's main trade partner -- grew slightly faster than
previously expected to 54.2 points in February, with new export
orders growing at the fastest rate in three years.
[]
A figure above 50 indicates expansion while a number below
50 marks contraction.
"PMI was just another piece of good information that fits
well with the overall positive sentiment," said Lukasz
Wojtkowiak, an FX analyst at Millennium bank in Warsaw.
Ex-communist central Europe is expected to post a modest
recovery this year, with Poland the most likely outperformer.
The Polish central bank said on Friday it expects the economy to
grow 3.1 percent in 2010 [].
Analysts said a visit to Athens on Monday by a high-ranking
EU delegation could lead to some form of aid in exchange for a
pledge by Greece to take fresh budget steps. []
After talks with Greek leaders, EU Monetary Affairs
Commissioner Olli Rehn urged Athens to introduce additional
consolidation measures, adding he was sure Greece and the euro
zone as a whole would overcome the crisis. []
ZLOTY SEEN EXTENDING GAINS
The region's currencies have managed to hold their ground
while Greece's debt crisis has raged as analysts believe central
Europe's finances to be in better shape than parts of the euro
zone.
By 1026 GMT the zloty <EURPLN=> was 0.2 percent higher, off
earlier highs. The Czech crown <EURCZK=> and Romania's leu
<EURRON=> also both added 0.2 percent against the common
currency while Hungary's forint <EURHUF=> was unchanged.
The zloty is the region's outperformer this year, rising
more than 4.3 percent against the common currency since the
start of the year, and analysts said the PMI index could add
fuel for a further appreciation.
"Taking into account (Polish companies') competitiveness and
results from our FX equilibrium model (which show the zloty is
still undervalued) we expect that in the coming months the
EUR/PLN will be drifting towards 3.70," Piotr Kalisz, chief
economist at Citibank Handlowy, wrote in a note.
On the bond market, Czech paper was little changed after the
country's finance ministry gave details of its issuance plan in
the second quarter. []
Poland's finance ministry estimated February inflation would
ease to 3.0 percent from 3.6 percent in January. A ministry
official said gains in the consumer price index might ease to
about 2.5 percent year-on-year in March.
Dealers said the forecast did not directly affect the bond
market, where gains on Monday were tracking the zloty.
"There was no reaction on the ministry's (inflation)
forecast, though the news is positive for the debt market," said
Krzysztof Izdebski, dealer at PKO BP in Warsaw.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.877 25.928 +0.2% +1.7%
Polish zloty <EURPLN=> 3.938 3.947 +0.23% +4.22%
Hungarian forint <EURHUF=> 269.26 269.24 -0.01% +0.4%
Croatian kuna <EURHRK=> 7.26 7.299 +0.54% +0.68%
Romanian leu <EURRON=> 4.104 4.11 +0.15% +3.25%
Serbian dinar <EURRSD=> 99.513 99.41 -0.1% -3.65%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +7 basis points to 105bps over bmk*
7-yr T-bond CZ7YT=RR -3 basis points to +125bps over bmk*
10-yr T-bond CZ10YT=RR -2 basis points to +107bps over
bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -2 basis points to +396bps over bmk*
5-yr T-bond PL5YT=RR -3 basis points to +324bps over bmk*
10-yr T-bond PL10YT=RR -2 basis points to +286bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -2 basis points to +538bps over bmk*
5-yr T-bond HU5YT=RR -3 basis points to +477bps over bmk*
10-yr T-bond HU10YT=RR -2 basis points to +437bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1026 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaus, writing by Dagmara
Leszkowicz; editing by Stephen Nisbet, John Stonestreet)
