* Zloty, forint jump, Hungary bonds surge on EU crisis plan
* Hungary stocks jump the most since late-2008, yields fall
* IMF to disburse Romania aid tranche only after cost cuts
(Adds new prices, quotes)
By Jason Hovet and Sandor Peto
PRAGUE/BUDAPEST, May 10 (Reuters) - The Polish zloty surged
on Monday and Hungarian stocks shot up 10 percent to lead
central Europe's rally after the European Union and IMF agreed a
750 billion euro rescue package to end the Greek debt crisis.
The leu lagged the gains after the IMF said it will disburse
the next tranche of a 20 billlion euros loan to Romania only
after the government has implemented draconic cost-saving
measures. []
The bailout to Greece, the biggest since G20 leaders pooled
cash after the Lehman collapse stoked the financial crisis in
2008, was put in place over the weekend to greet markets on
Monday, sparking a surge but leaving longer-term questions for
the monetary union. [] []
Central European assets won back some losses suffered in the
past month due to fears Greece's debt woes would spread to other
indebted euro zone periphery states like Spain or Portugal.
Dealers stayed cautious on the rally, warning the market had
the potential to reverse again after moves that sent the zloty
up at its fastest pace in more than a year and other markets to
their biggest intraday gains this year.
"I expect the forint to firm further now rather than weaken,
but we will still need to see how much market confidence (the
bailout) will build," one Budapest-based currency dealer said.
The region's most liquid currencies, the zloty <EURPLN=> and
the forint <EURHUF=> lost five and four percent against the
euro, respectively, last week.
The zloty <EURPLN=> jumped as much as 4 percent before
falling back to bid 3 percent up from Friday at 4.003 at 1345
GMT. The forint <EURHUF=> jumped 2.8 percent to 271.97.
Hungarian government bond yields fell around 60 basis
points, retracing part of last week's rise but still trading at
seven-week highs. The market has returned to expectations for a
central bank interest rate cut, which was priced out last week.
"FRAs (forward rate agreements) changed less (than bonds): a
25 basis point further rate cut is priced in," one trader said.
The Romanian leu <EURRON=> and Czech crown <EURCZK=>, which
have been steadier during market turmoil of the last month, rose
0.8 percent and 0.6 percent respectively. Dealers said the crown
lagged after a more than 1 percent gain late on Friday.
"I'm trying not to get too involved," a Prague currency
dealer said. "It used to be clear when the market was about the
market. But now if you have a lot of countries intervening, it's
getting hard to read things. Has anything really changed? No."
In Romania, the measures required by the IMF include deep
cuts in state wages and pensions. Despite those additional
measures, Romania and the IMF agreed for a wider budget deficit
due to worse-than-expected economic conditions.
SHORT RELIEF
The size of the crisis deal, along with an unexpected pledge
from the European Central Bank to buy euro zone bonds if needed,
boosted confidence among investors who had shunned riskier
emerging market assets in the past week. []
Stock markets surged at their fast pace in month with
Budapest <> rising 12 percent in its biggest daily gain
since the financial crisis started.
Prague <> jumped the most this year with a 7 percent rise
and Warsaw <> gained 5 percent.
Central Europe, with better growth outlook and lower debt
piles than periphery countries, had gained sharply to start the
year when the Greece crisis first started bubbling, but came
under pressure when investors feared the crisis would spread.
While sluggish demand at home is seen to continuing weighing
on many of central Europe's economies, currencies are seen
gaining over the next 12 months of rising export demand. But
volatility is expected to stay high for now. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.581 25.73 +0.58% +2.88%
Polish zloty <EURPLN=> 4.005 4.123 +2.95% +2.47%
Hungarian forint <EURHUF=> 271.97 279.63 +2.82% -0.6%
Croatian kuna <EURHRK=> 7.264 7.264 0% +0.62%
Romanian leu <EURRON=> 4.161 4.195 +0.82% +1.84%
Serbian dinar <EURRSD=> 99.83 99.89 +0.06% -3.96%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -9 basis points to 98bps over bmk*
7-yr T-bond CZ7YT=RR -14 basis points to +103bps over bmk*
10-yr T-bond CZ9YT=RR -18 basis points to +91bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -75 basis points to +551bps over bmk*
5-yr T-bond HU5YT=RR -76 basis points to +483bps over bmk*
10-yr T-bond HU10YT=RR -82 basis points to +392bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1545 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet/Sandor
Peto, editing by Jason Webb, Ron Askew, Toby Chopra)
