* Forint leads gains, bonds firm more after output data
* Warsaw stocks recover as KGHM offer priced, bonds stronger
(Adds bonds, details)
By Jason Hovet
PRAGUE, Jan 8 (Reuters) - The forint rose on Friday,
outpacing other emerging European currencies, after Hungary's
industrial output decline slowed, adding to evidence that the
region was recovering.
An export rebound is expected to boost currencies this year,
although strategists see fiscal concerns along with upcoming
elections for Hungary and the Czech Republic limiting market
gains in the first half of 2010. []
The annual drop in Hungary's industrial output slowed to 7
percent in November, according to preliminary data, mainly due
to base effects but in line with analysts' view. []
A Polish central bank official also forecast fourth-quarter
economic growth would top the roughly 2 percent year-on-year
expected by markets and may even have reached 3 percent,
underlining rising expectations for 2010 growth.[]
The forint <EURHUF=> rose 0.4 percent over Thursday's
domestic close to bid at 268.9 to the euro by 1040 GMT. The
Polish zloty <EURPLN=>, picked by strategists to outperform this
year, added 0.2 percent.
Bonds also extended gains seen since the start of the year,
with the 10-year yield falling around 11 basis points on Friday,
as foreign investors re-position in the region.
"Bonds have been continuously firming this year and
foreigners are buying," a trader said. "Sentiment is good; I
would not rule out that (3-year yields) will fall below the 7
percent mark again."
Hungary bond yields have dropped as much as 45 basis points
this year, with the spread between the 3- and 10-year bonds
tightening to 40 basis points from 60. The 3-year <HU3YT=RR> was
quoted with a yield of 7.15 percent on Friday.
Polish bonds also added to recent gains, with the 10-year
yield falling around 13 basis points this week.
Czech bonds, though, lost on the long-end, steepening the
curve as investors re-position before new supply hits the
market. Analysts say more hawkish central bank comments have
added to pressure.
But dealers said markets were mostly quiet on Friday before
the afternoon release of U.S. jobs data, expected to show a
better pace of recovery in the world's largest economy.
[]
BETTER TRADE
Hungary has been slower than peers to recover in the
downturn, although analysts said improvement in central Europe's
main export markets was a good sign.
November trade data from the Czech Republic this week showed
an export drop paused for the first time in more than a year,
lifting the overall trade surplus, which analysts said will add
currency support this year. [] []
The crown <EURCZK=> was steady at 26.293 to the euro on
Friday. Analysts in a Reuters poll on Wednesday forecast the
crown to firm to 25.7 per euro in three months, leading the
region in the short-term. <CEEFXPOLL01>
In Poland, the bourse <> rose 1 percent to recover
some losses from the previous session caused by the state's move
to sell a 10 percent stake in copper miner KGHM <KGHM.WA>.
The treasury ministry priced the offer at a discounted 103
zlotys per share on Friday. [] The sale has helped
Polish bonds as debt investors cheered the state's first move in
a plan to raise $8.8 billion from asset sales this year.
"Shareholders will take a stance on their appetite for the
10 percent (KGHM stake) and if there is large demand this story
may well be zloty supportive," SEB analysts said.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 26.293 26.297 +0.02% +0.1%
Polish zloty <EURPLN=> 4.106 4.112 +0.15% -0.05%
Hungarian forint <EURHUF=> 268.9 270.05 +0.43% +0.54%
Croatian kuna <EURHRK=> 7.291 7.281 -0.14% +0.25%
Romanian leu <EURRON=> 4.167 4.161 -0.14% +1.69%
Serbian dinar <EURRSD=> 97.13 97.27 +0.14% -1.29%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +1 basis points to 62bps over bmk*
7-yr T-bond CZ7YT=RR -5 basis points to +98bps over bmk*
10-yr T-bond CZ10YT=RR +7 basis points to +91bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +1 basis points to +384bps over bmk*
5-yr T-bond PL5YT=RR -6 basis points to +337bps over bmk*
10-yr T-bond PL10YT=RR -9 basis points to +274bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -9 basis points to +536bps over bmk*
5-yr T-bond HU5YT=RR -3 basis points to +496bps over bmk*
10-yr T-bond HU10YT=RR -13 basis points to +415bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1142 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet, editing
by Patrick Graham)
