* FX firm on euro/dollar, forint and leu lead
* Zloty stronger, investors eye Sunday presidential election
* Romania IMF talks, Hungary bank tax issue also in focus
(Adds fresh comments, prices)
By Sandor Peto and Dagmara Leszkowicz
BUDAPEST/WARSAW, July 2 (Reuters) - Central European
currencies mostly firmed on Friday after the euro, the region's
main reference currency, gained versus the dollar on improving
risk appetite.
U.S. labour market data, eagerly awaited by financial
markets, did not have a significant impact on central Europe's
currencies even though the data was worse than expected, adding
to concern about the strength of global economic recovery.
[]
On the domestic front, Poles elect a new president on
Sunday. They must choose between two conservative candidates
with sharply contrasting views on market reforms, the euro
currency and Poland's place in the European Union.
[]
A win for Bronislaw Komorowski of the centrist ruling party
would bode well for the fixed income and foreign exchange
markets in the short term, dealers said. By contrast, a victory
for Jaroslaw Kaczynski, a right-wing opposition leader and twin
brother of President Lech Kaczynski who died in a plane crash in
April, may hurt markets, though perhaps not too seriously.
"I expect the zloty to gain by 1 percentage point after a
Komorowski victory and to fall by 2 percentage points if
Kaczynski wins," said one Warsaw-based dealer.
The zloty <EURPLN=>, which has lost more than 5 percent of
its value against the euro since the start of May on increased
risk aversion, was 0.4 percent stronger by 1318 GMT.
Other currencies rose, with the Romanian leu <EURRON=> up
more than 1 percent, the Hungarian forint <EURHUF=> some 0.8
percent firmer and the Czech crown also a touch higher.
ROMANIA AID
Hungarian Economy Minister Gyorgy Matolcsy told Reuters on
Friday he hoped international lenders would agree to the country
running a budget deficit for 2011 of 3.0-3.8 percent of GDP, not
below 3 percent as agreed earlier.
He also said the largest foreign banks in Hungary had
withdrawn from talks about a bank tax but the bill on the tax
would be submitted to parliament on Friday anyway.
[]
"The forint has been underperforming (in the past weeks) due
to these uncertainties," one Budapest-based trader said.
Central Europe's main stock indices rose, led by Bucharest's
<>, which jumped 2.3 percent.
The IMF is deciding whether to release the next 850 million
euro tranche of aid to Romania.
"If the IMF approves the scheduled disbursement of the fifth
tranche, as we expect, this would translate into a relief for
the leu, which is around 2.5 percent weaker than last week, when
the decision of the Constitutional Court put pressure on
Romanian assets," UniCredit said in a note.
Romania's constitutional court last week ruled against
planned pension cuts, compelling the government to hike
value-added tax by 5 percentage points to 24 percent.
Hungary will also start talks with the IMF and the European
Commission next week about the review of its existing loans and
a possible extension.
Analysts remained about economic recovery, with UniCredit
saying the outlook would prompt central banks to postpone
interest rate hikes in the region to 2011.
The Czech central bank says risks to its macroeconomic
forecasts remain balanced, but uncertainty also remains high.
[]
Poland's central bank inflation projection showed economic
growth may accelerate to 3.2 percent this year and should speed
up further in 2011 to 4.6 percent, mainly thanks to increased
public investment. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.723 25.726 +0.01% +2.31%
Polish zloty <EURPLN=> 4.149 4.165 +0.39% -1.08%
Hungarian forint <EURHUF=> 285 287.16 +0.76% -5.14%
Croatian kuna <EURHRK=> 7.191 7.194 +0.04% +1.64%
Romanian leu <EURRON=> 4.292 4.34 +1.12% -1.27%
Serbian dinar <EURRSD=> 104.25 104.49 +0.23% -8.03%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +1 basis points to 124bps over bmk*
7-yr T-bond CZ7YT=RR 0 basis points to +140bps over bmk*
10-yr T-bond CZ9YT=RR -7 basis points to +140bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR 0 basis points to +408bps over bmk*
5-yr T-bond PL5YT=RR -3 basis points to +386bps over bmk*
10-yr T-bond PL10YT=RR -3 basis points to +323bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -9 basis points to +618bps over bmk*
5-yr T-bond HU5YT=RR -15 basis points to +592bps over bmk*
10-yr T-bond HU10YT=RR -11 basis points to +497bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1518 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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brackets: All emerging market news []
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(Reporting by Reuters bureaux, writing by Marton Dunai and
Sandor Peto; Editing by Sonya Hepinstall and Susan Fenton)
