* Polish March CPI faster than expected, boosts hike hopes
* Zloty rises 0.7 pct on day, outperforms regional peers
* Hungary reveals some fiscal reform details, forint slips
(Adds Polish data, Hungary Econ Minister, bonds)
By Sam Cage and Krisztina Than
BUCHAREST/BUDAPEST, April 13 (Reuters) - Polish bond yields
rose and the zloty strengthened on Wednesday, outperforming the
region after inflation rose faster than expected in March and
prompted analysts to predict an interest rate hike next month.
Data showed Poland's consumer prices <PLCPIY=ECI> rose 4.3
percent in March, up from 3.6 percent in February and above a
forecast of 3.8 percent in a Reuters poll. []
[]
"That puts inflation way above the central bank's inflation
target range of 1.5-3.5 percent and is likely to fuel
speculation of a May hike," Nordea said in a note.
"Consequently, we expect higher market rates and a stronger
PLN (zloty)."
The zloty <EURPLN=> extended earlier gains, rising 0.3
percent immediately after the release. It was up 0.7 percent
from the previous close at 3.958 per euro by 1305 GMT.
Polish bond yields also rose by up to 6 basis points from
the previous session.
The Polish central bank has raised its key rate twice so far
this year. After a rate hike last week some analysts had
expected a pause in tightening, but two central bankers called
for a new hike immediately after the data. []
The figures came on the heels of Hungarian numbers on
Tuesday, which also showed an acceleration in March inflation
driven mainly by food prices. But that country's central bank is
widely expected to keep rates on hold for a while.
On Wednesday Hungarian Economy Minister Gyorgy Matolcsy
revealed some details of the government's fiscal reforms, saying
the government planned to cut subsidies to state railway firm
MAV by 45 billion forints ($244.7 million) next year and 60
billion forints in both 2013 and 2014.
Matolcsy said there was no need for additional measures to
meet budget targets even if economic growth does not rise
significantly above 3 percent. []
Financial markets, which welcomed Hungary's announcement of
its reform plans in March with a rally, have been looking for
details on the measures, which must keep the budget deficit
below 3 percent of GDP both next year and when big one-off
crisis taxes will expire by 2013.
Hungary has to submit its updated convergence programme to
Brussels later this week, and investors hope it contains further
details on the fiscal measures.
ZLOTY/FORINT TRADE
Hungary's forint <EURHUF=> was flat to the euro at 1305 GMT
after being stuck in a range between 265.80-267 the whole day.
Some dealers said players had bought the Polish zloty and
sold the forint <PLNHUF=R> in dips around 67.00. At 1327 GMT the
pair traded at around 67.26.
Hungarian bond yields fell 5-8 basis points on an expected
euro-denominated bond issue by the Hungarian government in the
near term. []
Romania's leu <EURRON=> was up 0.2 percent at 1305 GMT.
The Czech crown <EURCZK=> was flat, unmoved by the breakdown
of talks between government parties on Tuesday after the
smallest coalition partner refused to bend to the prime
minister's demand for the dismissal of its key minister.
[]
Analysts, however, said it would only be a matter of time
before markets started pricing in risks to a government that has
so far done well on fiscal policy and reining in the deficit.
Poland also released current account data which showed the
<PLCAM=ECI> deficit narrowed in February to 0.685 billion euros
from 1.334 bln after a revision in January.
Analysts polled by Reuters had expected the deficit at 0.421
billion euros. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.393 24.403 +0.04% +2.49%
Polish zloty <EURPLN=> 3.958 3.984 +0.66% 0%
Hungarian forint <EURHUF=> 266.32 266.24 -0.03% +4.38%
Croatian kuna <EURHRK=> 7.367 7.364 -0.04% +0.18%
Romanian leu <EURRON=> 4.101 4.108 +0.17% +3.22%
Serbian dinar <EURRSD=> 101.1 101.1 0% + 4.77%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -2 basis points to -12bps over bmk*
7-yr T-bond CZ7YT=RR -4 basis points to +40bps over bmk*
10-yr T-bond CZ9YT=RR -6 basis points to +52bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +3 basis points to +318bps over bmk*
5-yr T-bond PL5YT=RR -1 basis points to +300bps over bmk*
10-yr T-bond PL10YT=RR -2 basis points to +269bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -10 basis points to +431bps over bmk*
5-yr T-bond HU5YT=RR -9 basis points to +403bps over bmk*
10-yr T-bond HU10YT=RR -11 basis points to +357bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1505 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
(Reporting by Reuters bureaux;)
