* ECB keeps borrowing costs on hold, as expected
* Romania rejects all bids at tender for 3-year debt
* Analysts see zloty leading currency gains this year
(Recasts with ECB reaction, Romania debt, currency poll)
By Pawel Bernat and Sam Cage
WARSAW/BUCHAREST, March 3 (Reuters) - Emerging European
currencies edged lower against the euro but jumped against the
dollar on Thursday after the ECB signalled interest rate rises
ahead, while Romania rejected all bids at a debt tender.
European Central Bank President Jean-Claude Trichet said the
bank may hike interest rates next month, far earlier than
markets expected, though any rise would not signal the start of
a series of increases. []
The euro surged against the dollar <EUR=> but emerging
European currencies -- often influenced by events in the euro
zone, the region's main trading partner -- nudged lower against
the common currency.
"Currencies are up against USD. They are all pretty much
following the euro, but no major impact yet," a trader said.
Romania rejected all bids for its three-year debt, its first
failed tender since it abandoned a policy of capping yields in
November and indicating money market tension was pushing
investor demands higher. []
"It is unclear how much it was banks pushing yields too high
or whether the finance ministry was in a good enough financing
position to allow it to reject rates above its comfort level,"
said Vlad Muscalu, an ING Bank Romania economist.
"But this tender confirms that tension on the money market
has extended to longer term debt yields."
The leu <EURRON=> was flat after the debt tender, still
close to 9-month highs after final GDP figures for the fourth
quarter showed the economy contracted by a less-than-expected
0.6 percent on an annual basis. []
ZLOTY SEEN LEADING GAINS
Poland's zloty <EURPLN=> was down 0.2 percent and close to
its 200-day moving average of 3.983 per euro while Polish bonds
were almost unchanged from Wednesday's levels when a decision to
leave rates unchanged supported the shorter end of the curve.
The Polish central bank's 10-strong Monetary Policy Council
left its main rate at 3.75 percent, citing weak wage pressure
and investments as well as high unemployment, but signalling
further monetary tightening ahead to cool accelerating
inflation. []
The zloty is seen leading currency gains in Central Europe
in the next 12 months, while possible monetary policy loosening
in Hungary could limit any gains by the forint, a Reuters poll
showed on Thursday.
The poll projects that the zloty could firm 5.6 percent in
the next year relative to Wednesday's market close. Other
currencies are also expected to rise []
The forint <EURHUF=> fell 0.3 percent and Hungarian
government bonds eased after the ECB comments. The Czech crown
<EURCZK=> was 0.1 percent higher.
Stocks rose across the region, with Warsaw <> and
Bucharest <> bourses each gaining more than 1 percent and
Prague 0.8 percent higher <>. Budapest was flat.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.223 24.254 +0.13% +3.21%
Polish zloty <EURPLN=> 3.988 3.98 -0.2% -0.75%
Hungarian forint <EURHUF=> 272.16 271.25 -0.33% +2.14%
Croatian kuna <EURHRK=> 7.405 7.413 +0.11% -0.34%
Romanian leu <EURRON=> 4.204 4.201 -0.07% +0.69%
Serbian dinar <EURRSD=> 103.59 103.91 +0.31% +2.26%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -29 basis points to -7bps over bmk*
7-yr T-bond CZ7YT=RR -18 basis points to +59bps over bmk*
10-yr T-bond CZ9YT=RR -4 basis points to +77bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -2 basis points to +345bps over bmk*
5-yr T-bond PL5YT=RR -4 basis points to +336bps over bmk*
10-yr T-bond PL10YT=RR -3 basis points to +301bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -15 basis points to +472bps over bmk*
5-yr T-bond HU5YT=RR -14 basis points to +453bps over bmk*
10-yr T-bond HU10YT=RR -6 basis points to +397bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1553 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
(Reporting by Reuters bureaus)
