* FX mostly up in quiet trade, zloty firmer on PGE selloff
* Bonds move sideways in slow trade, equities firm
* Czech cbank says no need to intervene against crown
By Sandor Peto and Dagmara Leszkowicz
BUDAPEST/WARSAW, Oct 11 (Reuters) - Central Europe's
currencies were mostly stronger in quiet trade on Monday, led by
the zloty on expectations for currency inflows following the
sale of a stake in Poland's largest utility PGE.
Warsaw sold 10 percent of the utility <PGEP.WA> in the open
market on Friday and sources close to the transaction said that
about 30 percent of the stake could go to foreign investors, who
would need to convert euros into zlotys for the transaction.
"There's a probable flow coming into the market and this is
a supportive factor for the Polish currency," said Karol
Zaluski, chief dealer at ING bank in Warsaw.
Poland's ambitious privatisation plans for 2010 are forecast
to generate $8.1 billion zlotys, with about half of that already
raised.
It still hopes to sell a controlling stake in power producer
Enea <ENAE.WA> worth $1.8 billion by the end of the year after
four groups placed bids last week. []
By 1412 GMT the zloty <EURPLN=> was 0.3 percent stronger,
bid at 3.954. Other currencies were mixed, with Hungary's forint
<EURHUF=> up 0.25 percent and the Czech crown <EURCZK=> down 0.2
percent.
The crown has been the best-performing emerging European
currency this year and central bank chief Miroslav Singer said
in a presentation released on Monday that there was no reason to
intervene to stem its strength. []
Daily Hospodarske Noviny quoted Singer as saying the crown's
present value was not dramatic although "the pace of
appreciation in the past days was rather steep."
Stocks in the region were all in the black, with Warsaw's
WIG20 index <> leading gains, up 0.8 percent.
Trading was thin as U.S. bond markets were closed for a
holiday and players digested economic data from Friday, which
boosted expectations the U.S. Federal Reserve would adopt more
quantitative easing to shore up the U.S. economy.
INFLATION RISK
Data on Monday showed Czech and Romanian annual inflation
picked up in September and investors pondered the impact of
surging fund inflows on exchange rates.
September Czech inflation was a touch higher than expected
and reached the central bank's 2 percent target. Romanian annual
inflation ticked up to 7.8 percent, and some analysts said that
could raise expectations for an interest rate rise next year.
[] []
Inflation has been of less concern to regional policymakers
since the financial crisis, with central banks in Hungary and
Romania more focused on the impact of weak public finances and
IMF bailouts on their debt and currency markets.
However, debate is beginning in some countries over whether
inflation is now taking hold and when will be the right time to
start tightening monetary policy.
Hungary will publish inflation data on Tuesday and Poland on
Wednesday, with inflation in both countries expected to rise.
The Hungarian government is also expected to publish closely
watched budget plans for 2011 later this month.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.515 24.469 -0.19% +7.35%
Polish zloty <EURPLN=> 3.954 3.967 +0.33% +3.79%
Hungarian forint <EURHUF=> 274.03 274.72 +0.25% -1.34%
Croatian kuna <EURHRK=> 7.319 7.315 -0.05% -0.13%
Romanian leu <EURRON=> 4.265 4.265 0% -0.65%
Serbian dinar <EURRSD=> 106.117 105.81 -0.29% -9.65%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR 0 basis points to 97bps over bmk*
7-yr T-bond CZ7YT=RR 0 basis points to +97bps over bmk*
10-yr T-bond CZ9YT=RR +2 basis points to +108bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -3 basis points to +380bps over bmk*
5-yr T-bond PL5YT=RR +15 basis points to +359bps over bmk*
10-yr T-bond PL10YT=RR -3 basis points to +317bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -4 basis points to +542bps over bmk*
5-yr T-bond HU5YT=RR +8 basis points to +508bps over bmk*
10-yr T-bond HU10YT=RR -3 basis points to +443bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1612 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
For related news and prices, click on the codes in brackets:
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(Reporting by Krisztina Than/Sandor Peto/Dagmara Leszkowicz;
Editing by Susan Fenton)
