(Adds fixed income)
WARSAW, Dec 8 (Reuters) - Emerging Europe's currencies rose
early on Monday as global stocks surged and investors grew more
confident about buying riskier assets.
Better sentiment in the region was also helped by U.S.
president-elect Barack Obama's announcement of an economic
recovery plan saying the country may launch the largest
infrastructure investment since the 1950s.
Stocks, a key driver for currencies, rose despite weaker
data on Friday from the U.S. labour market. On Monday the
FTSEurofirst 300 <> index of top European shares traded
5.8 percent higher at 840.05 points.
At 0917 the Czech crown <EURCZK=> was more than 1 percent up
against the euro trading at 25.52, while Hungary's forint
<EURHUF=> and the Polish zloty <EURPLN=> gained 1 percent and
0.7 percent respectively.
"Falling risk aversion caused by huge gains on global stocks
as well as the U.S. president-elect's economy recovery plan
helped boost emerging market currencies," said Lukasz
Wojtkowiak, FX analyst at Millennium Bank.
He said the zloty may strengthen further in the coming days
in the absence of significant macroeconomic data.
Dealers in Budapest say the forint may also rise further but
trading there is still volatile.
"The mood on the market has swung once again, this time in
the positive direction, and the forint is benefiting," a
Budapest-based dealer said. "With stocks up, core markets
stronger and the forint coming off a big drop on Friday, there's
room for gains."
"But I expect gains to be limited and trade to be volatile
as the market is illiquid and even moderate trades can swing
prices," he said.
The Serbian dinar <EURRSD=> also rose sharply on Monday,
gaining more than 3 percent but the currency was the hardest hit
of the region's currencies recently, losing more than 20 percent
since August on external funding worries.
Other currencies from the region remained relatively steady,
moving around its close levels.
BONDS MIXED, MAY RISE ON FALLING RATES
Bonds were mixed early on Monday, but dealers said papers
may strengthen as most central banks from the region signal
further interest rate cuts.
The Czech statistics office said consumer prices rose 4.4
percent in November, down from 6.0 percent in October.
[] Some Prague-based analysts say such a drop in
inflation leaves the door open for cutting rates by even 50
basis points at a mid-December meeting.
"Inflation data is more important now as the next interest
rate-setting meeting is approaching. And the dilemma that
financial markets will be solving is whether the bank cuts rates
by 25 basis points or 50 basis points," said David Marek, chief
analyst at Patria Finance. "Such a steep drop in inflation
leaves a door open for cutting rates by 50 basis points."
In Hungary yields were higher in thin trade and dealers said
markets were waiting for the central bank to conclude a monthly
meeting which would not normally discuss rates.
"There's some talk of an extraordinary rate meeting today,"
a dealer said. "Last month they surprised with the 50 basis
point rate cut so at this point, I wouldn't call anything
surprising."
"But no matter what happens, it's going to be a quiet day
until 2 in the afternoon (local time, when the central bank ends
the non-rate setting meeting."
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 25.526 25.82 +1.14% +3.66%
Polish zloty <EURPLN=> 3.86 3.886 +0.67% -7.21%
Hungarian forint <EURHUF=> 263.33 265.8 +0.93% -4.14%
Croatian kuna <EURHRK=> 7.179 7.18 +0.01% +2.01%
Romanian leu <EURRON=> 3.848 3.85 +0.05% -7.48%
Serbian dinar <EURRSD=> 85.352 88.078 +3.09% -8.37%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +5 basis points to 169bps over bmk*
5-yr T-bond CZ5YT=RR -25 basis points to +153bps over bmk*
10-yr T-bond CZ9YT=RR -14 basis points to +120bps over
bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -18 basis points to +328bps over bmk*
5-yr T-bond PL5YT=RR -39 basis points to +276bps over bmk*
10-yr T-bond PL10YT=RR -25 basis points to +256bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -71 basis points to +795bps over bmk*
5-yr T-bond HU5YT=RR -80 basis points to +739bps over bmk*
10-yr T-bond HU10YT=RR -9 basis points to +544bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 0917 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
For related news and prices, click on the codes in brackets:
All emerging market news []
Spot FX rates Eastern Europe spot FX <EEFX=>
Middle East spot FX <MEFX=> Asia spot FX <ASIAFX=>
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Other news and reports
World central bank news [] Economic Data Guide <ECONGUIDE>
Official rates [] Emerging Diary []
Top events [] Diaries [] Diaries Index []
(Reporting by Reuters bureaus, Writing by Dagmara Leszkowicz;
editing by Tony Austin)
