(changes dateline, adds detail, quotes)
By Marius Zaharia
BUCHAREST, Oct 29 (Reuters) - The Polish zloty and Hungarian
forint led central European currencies higher on Wednesday,
spurred by news of a bigger-than-expected IMF/EU rescue package
for Budapest and a jump in global stock markets.
Economists said the $25.1 billion Hungary-IMF deal, the
first for an EU member in this crisis, raised hopes that global
financial institutions would help shield the EU's emerging
economies from pain [].
Huge gains on U.S. and Asian stock markets overnight, and a
sharp recovery of central European stocks also lifted sentiment,
with Hungary's BUX <> gaining over 12 percent, Prague's PX
<> over 13 percent and Poland's WIG 20 <> 8 percent.
Some economists said EU plans for higher crisis funding
facilities [] and investors looking forward to an
expected cut in U.S. interest rates and to similar prospects for
the ECB, were also behind the rally.
The zloty <EURPLN=> gained more than 3 percent against the
euro, breaking through the level of 3.55 in late trade. The
forint <EURHUF=> was up 2.8 percent to 256.14 per euro, while
the Czech crown <EURCZK=> and the Romanian leu <EURRON=> were up
around 2 percent each.
"There is a contagion effect in the region with Hungary
being the driver, and global markets are also helpful with a
return to a better sentiment," said Barbara Nestor, an analyst
with Commerzbank in London.
"And when stock exchanges are gaining and equity market
flows are helping currencies, the Polish zloty gains the most
because Warsaw is the most liquid ... and most active."
In Poland, the central bank kept rates <PLINTR=ECI> flat as
expected []. On Tuesday, the government confirmed a
timetable for adopting the euro on January 1, 2012
[] but dealers said there was no major impact on the
currency.
In other trade, Croatia's kuna <EURHRK=> was 0.26 percent
higher at 7.171 to the euro. The Croat central bank said it had
rejected all offers from commercial banks at an auction to buy
euros and ease liquidity strains [].
The Serb dinar <EURRSD=> recovered from 12-month lows to
trade virtually flat against the euro on the day at 84.53 as the
central bank sold euros for the second time this week.
On the bond market, Hungary's paper yields were down but
dealers said the market remained illiquid in thin trade.
"Government papers firmed tracking the forint, yields
dropped about 30 basis points, then there was a bit of selling
again, mainly foreigners which made sentiment a bit uncertain,"
a fixed income trader said.
Hungary's government debt agency has cancelled all bond
auctions planned for the rest of the year and will review its
t-bill issues as well [].
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 23.765 24.237 +1.95% +10.31%
Polish zloty <EURPLN=> 3.556 3.69 +3.63% +1.24%
Hungarian forint <EURHUF=> 256.14 263.5 +2.79% -1.3%
Croatian kuna <EURHRK=> 7.17 7.189 +0.26% +2.14%
Romanian leu <EURRON=> 3.629 3.706 +2.08% -1.36%
Serbian dinar <EURRSD=> 84.53 84.587 +0.07% -7.33%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -16 basis points to 201bps over bmk*
5-yr T-bond CZ5YT=RR -41 basis points to +152bps over bmk*
10-yr T-bond CZ9YT=RR -24 basis points to +121bps over
bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -1 basis points to +1067bps over bmk*
5-yr T-bond HU5YT=RR +1 basis points to +965bps over bmk*
10-yr T-bond HU10YT=RR -3 basis points to +681bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1629 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
(Reporting by Reuters bureaus, writing by Marius Zaharia,
editing by Stephen Nisbet)
