* FX flat, zloty pauses rally as euro weakens vs dollar
* Hungary, Czech Republic figures well above forecast
* Hungary 2010 budget on target
(Updates with Hungary budget data, quote)
By Marius Zaharia
BUCHAREST, Jan 7 (Reuters) - Central European currencies
edged down on Friday, as a weak euro overshadowed news that
Hungary met its 2010 cash-flow budget goal and forecast-beating
industrial output figures out of Czech Republic and Hungary.
Czech industrial output rose well above analysts' forecasts
at 15.9 percent year-on-year in November, a second straight day
of strong data following a large jump in exports released on
Thursday. []
Hungary's industry figures also came out much higher than
expected, posting 14.5 percent growth. Analysts attributed the
good performance to exports to Germany.
But regional assets did not benefit from the positive
figure, as the euro, central Europe's reference currency, hit
four-month lows against the dollar. Currencies usually track
changes in the euro/dollar cross.
News that Hungary met its 2010 budget target of 3.8 percent
of the gross domestic product also failed to impact markets,
which are wary of the short-term nature of the measures that
boosted revenues and the growth-limiting impact of special
corporate taxes. []
Yields on Hungarian bonds rose by about 5 basis points.
"The budget figures would have had more impact if they were
bad," one Budapest-based fixed income trader said.
"They signal that if last year's deficit goal was met, the
chance is bigger that this year's target will be met, too. But
markets in the euro peripheries weaken with yields relative to
Bunds rising."
At 1027 GMT, the Czech crown <EURCZK=> was flat, while the
Hungarian forint <EURHUF=> was 0.3 percent down on the day.
Dealers said the forint remained vulnerable as Hungary,
which took over the six-month European Union presidency at the
start of the year, continued to face criticism for its budget
policies and other reforms.
Markets are keeping in mind a promise by the government to
announce spending cuts in February, and further volatility could
be sparked if this is not delivered.
"We maintain our view that the government can realistically
keep the general government budget deficit below 3.0 percent of
GDP in 2012 and beyond if it embarks on spending cuts," Credit
Suisse said in a note.
POLAND, ROMANIA
The Polish zloty <EURPLN=> took a breather after this week's
rally pushed it to nine-month highs at 3.8460 per euro in the
previous session, propelled by increased expectations that
Poland's central bank may start hiking interest rates soon.
Bonds were also little changed on Friday, but the 10-year
yields traded near a resistance level of 6.20 percent.
Some market players are betting on a widening of spreads
between Czech and Polish yields at the shorter end of the curve,
as the interest rate outlook in Prague looks more dovish.
The International Monetary Fund's board will review
Romania's 20 billion euro aid package on Friday. The country is
set to receive the next tranche from the IMF worth about 900
million euros and more than 1 billion from the EU Commission.
Romania's leu <EURRON=> was down 0.1 percent at 4.256.
The outlook for Romanian assets improved late last year
after the government survived two no-confidence votes and passed
key legislation that the IMF says will allow significant future
budget savings.
Erste Group sees the leu at 4.1 per euro by end-2011.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.636 24.633 -0.01% +1.48%
Polish zloty <EURPLN=> 3.872 3.866 -0.15% +2.22%
Hungarian forint <EURHUF=> 276.98 276.07 -0.33% +0.36%
Croatian kuna <EURHRK=> 7.402 7.398 -0.05% -0.3%
Romanian leu <EURRON=> 4.256 4.254 -0.05% -0.54%
Serbian dinar <EURRSD=> 105.93 105.917 -0.01% 0%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -3 basis points to 95bps over bmk*
7-yr T-bond CZ7YT=RR +1 basis points to +89bps over bmk*
10-yr T-bond CZ9YT=RR -1 basis points to +94bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -2 basis points to +409bps over bmk*
5-yr T-bond PL5YT=RR 0 basis points to +382bps over bmk*
10-yr T-bond PL10YT=RR -1 basis points to +324bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +5 basis points to +656bps over bmk*
5-yr T-bond HU5YT=RR +4 basis points to +595bps over bmk*
10-yr T-bond HU10YT=RR +3 basis points to +498bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1127 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaux, writing by Marius Zaharia;
editing by Stephen Nisbet)
