* FX down, stocks up as better U.S. consumer view helps
* Polish zloty, bonds quiet before cbank decision
* Czech bonds stable after 2010 borrowing picture
(Adds details, fixed income)
By Jason Hovet
PRAGUE, May 27 (Reuters) - Poland's zloty slipped with peers
on Wednesday, although rising stocks helped it hold some gains
from late in the previous session as markets awaited a central
bank meeting expected to keep interest rates flat.
A higher U.S. consumer confidence reading on Tuesday boosted
investors appetite for riskier emerging assets, lifting global
stocks and prompting a recovery for central European currencies
in the last hour or so of local trade.
Currencies edged a touch lower in quiet trade on Wednesday
but mostly stayed off Tuesday's lows, while central European
stock markets rose as much as 2 percent.
The zloty <EURPLN=> was down 0.4 percent from Tuesday's
domestic close by 0915 GMT, bidding at 4.434 to the euro.
Analysts expect interest rates in Poland to stay put for now
at an all-time low of 3.75 percent as the slowing economy has so
far failed to tame inflation. []
"The zloty will stay calm until the bank decision. The
market is pricing in unchanged rates," a Warsaw dealer said. "I
don't think the market is expecting many more rate cuts in the
future."
Central Europe's export-heavy economies have contracted
sharply due to a fall in demand for their cars and electronics.
However, Poland's economy is seen better placed than peers
because of stronger domestic demand, highlighted on Tuesday with
higher than expected retail sales.
But the economic hit in eastern Europe has squeezed
government revenue and widened budget deficits, while rising bad
loans are starting to hurt banks -- which dealers said will keep
currencies under pressure in the coming months.
Moody's ratings agency put several Polish and Czech banks on
review for possible downgrades late on Tuesday. []
[]
LOOKING FOR GROWTH
Dealers said markets would watch for Polish first quarter
GDP data due out this week.
"Debt prices will remain quite stable until Friday, when the
Polish statistics office is due to release the first quarter GDP
data," one fixed-income dealer said. "We know the result will be
low and this may cause a bigger move on the debt market as it
will allow an estimate to the budget deficit."
In the Czech Republic, the government is cutting spending to
keep budget deficits under 5 percent of GDP in the coming years.
On Tuesday, Finance Minister Eduard Janota told Reuters 2010
borrowing should be around 260 billion crowns, a touch below
this year's level of an estimated 280 billion. []
Dealers said the figure was of little surprise, and Czech
yields stayed stable on Wednesday. The Czech crown <EURCZK=>
fell 0.3 percent to bid at 26.742 per euro.
In Hungary, the forint <EURHUF=> was down a touch from
Tuesday to bid at 281.03 per euro but off Tuesday lows, while
Romania's leu <EURRON=> edged 0.1 percent lower.
"Although spillover from the US Consumer Confidence should
support higher beta stories in the region today, we are now
reaching the stage where economic data need to be that much
stronger to have a wow-effect," Cheuvreux analysts wrote.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.742 26.672 -0.26% +0.04%
Polish zloty <EURPLN=> 4.434 4.415 -0.43% -7.19%
Hungarian forint <EURHUF=> 281.03 280.72 -0.11% -6.22%
Croatian kuna <EURHRK=> 7.302 7.274 -0.38% +0.86%
Romanian leu <EURRON=> 4.179 4.175 -0.1% -3.94%
Serbian dinar <EURRSD=> 94.327 94.386 +0.06% -5.14%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -4 basis points to 145bps over bmk*
4-yr T-bond CZ4YT=RR +20 basis points to +179bps over bmk*
8-yr T-bond CZ8YT=RR +6 basis points to +257bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -5 basis points to +415bps over bmk*
5-yr T-bond PL5YT=RR -1 basis points to +314bps over bmk*
10-yr T-bond PL10YT=RR 0 basis points to +271bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -1 basis points to +809bps over bmk*
5-yr T-bond HU5YT=RR -6 basis points to +733bps over bmk*
10-yr T-bond HU10YT=RR -6 basis points to +625bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1116 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; editing
by Patrick Graham and Andy Bruce)
