* Forint recovers losses, other FX mixed
* Strong Polish data fails to support zloty
* Leu trade quieter after cbank intervention this week
(Updates throughout)
By Jason Hovet and Dagmara Leszkowicz
PRAGUE/WARSAW, Sept 17 (Reuters) - The Hungarian forint
edged up on Friday after two days of losses, while the Polish
zloty was a touch weaker despite strong industrial output data,
which raised expectations for a Polish interest rate rise soon.
Polish industrial output jumped 13.5 percent year-on-year in
August, a fourth consecutive month of double digit growth,
cementing expectations the central bank will raise interest
rates soon. []
"The data is clearly supportive for the zloty in the longer
term, but the recent rebound of the dollar caused a slight fall
in the Polish unit," said Jakub Wiraszka, dealer at BRE bank in
Warsaw. "Right now, it is struggling at the resistance level at
3.96-3.97 (to the euro)."
A Polish finance ministry official said industrial output
growth could slow in coming months.
Poland's key interest rate is at a record low 3.5 percent
and the market expects the central bank to raise it by 25 basis
points by the end of the year.
By 1320 GMT the zloty <EURPLN=> was 0.3 percent weaker at
3.964.
Other currencies were mixed, with the Czech crown <EURCZK=>
virtually unchanged while the Hungarian forint <EURHUF=> was 0.3
percent stronger against the euro. That reversed some of its
losses in the two previous sessions triggered by the threat of a
ratings downgrade and uncertainty over Budapest's plans to cut
its debt, which also weighed on bonds. []
Markets in Hungary are already looking to October municipal
elections after which more details on the 2011 budget are likely
to be released, and analysts say Hungarian assets will largely
track regional and global markets until then.
Hungary's Economy Minister Gyorgy Matolcsy told Kossuth
radio on Friday that the central bank should introduce monetary
stimulus next year, saying the economy could grow by 2.5 percent
to 3.0 percent in 2011. []
Markets have been keeping a close eye on the sometimes
confusing comments from Hungary's centre-right government, which
has pledged to cut its budget deficit without IMF help.
EUROBONDS
Poland issued a 1 billion Eurobond due in 2021 on Thursday
at 120 basis points above mid-swaps, following on the heels of a
2 billion euro Czech Eurobond last week at a price a touch
tighter.
With lower debt and better economic growth prospects than
many Eastern European and euro zone periphery countries, Poland
and the Czech Republic have had an easier time on debt markets
than states like Romania, which has struggled with domestic debt
sales.
The Romanian leu <EURRON=> dropped 0.2 percent in thin trade
after what dealers said was probably central bank intervention
on Tuesday to lift the leu. The central bank has not commented
on possible interventions since late 2008. []
On the debt side, analysts say the finance ministry has
driven itself into a corner by refusing to sell bonds at yields
above 7 percent and faces a funding crunch in November when
yields could jump by up to 1 percentage point. []
Polish bonds were flat on Friday but dealers saw further
upside given still very strong foreign investor appetite for
Polish debt.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.675 24.681 +0.02% +6.66%
Polish zloty <EURPLN=> 3.964 3.953 -0.28% +3.53%
Hungarian forint <EURHUF=> 282.5 283.2 +0.25% -4.3%
Croatian kuna <EURHRK=> 7.281 7.261 -0.27% +0.39%
Romanian leu <EURRON=> 4.255 4.243 -0.28% -0.41%
Serbian dinar <EURRSD=> 105.34 105.35 +0.01% -8.98%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +3 basis points to 98bps over bmk*
7-yr T-bond CZ7YT=RR +4 basis points to +92bps over bmk*
10-yr T-bond CZ9YT=RR +9 basis points to +96bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +4 basis points to +387bps over bmk*
5-yr T-bond PL5YT=RR +5 basis points to +368bps over bmk*
10-yr T-bond PL10YT=RR +8 basis points to +306bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +9 basis points to +587bps over bmk*
5-yr T-bond HU5YT=RR +11 basis points to +546bps over bmk*
10-yr T-bond HU10YT=RR +12 basis points to +453bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1520 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 and
Dagmara Leszkowicz; Editing by Hugh Lawson and Susan Fenton)
