* FX stable on global optimism, bond issues
* Czech finmin expects deeper GDP contraction, crown unfazed
* Room for debate grows on further Czech rate cuts - cbanker
(Adds bonds, detail, quotes, writes through)
By Dagmara Leszkowicz
WARSAW, July 22 (Reuters) - Emerging Europe's markets were
mixed on Wednesday with currencies and bonds inching higher but
stocks weaker, as global sentiment remained positive while local
news pointed to a continuing economic slide.
Czech Finance Minister Eduard Janota said the country's
economy could contract by nearly twice as much more this year
than earlier expected -- forecasting a 4.3 percent dip against
the 2.3 percent seen in April. []
Central Bank Vice Governor Miroslav Singer had hinted on
Tuesday that the room to debate further lowering rates has grown
amid increasing concern over inflation seen lower than the
target. []
Still, at 0951 GMT the Czech crown <EURCZK=> was the top
gainer in the region, 0.3 percent stronger versus the euro than
yesterday's close, which a trader in Budapest said was probably
due to a very illiquid market.
The Hungarian forint <EURHUF=> and the Polish zloty
<EURPLN=> were 0.1 percent stronger, and the Romanian leu
<EURRON=> was flat.
"Stock indices are performing quite well, the sentiment is
improving - the direction (of currencies) is upward. Now the
only question is about the next key levels," said one
Warsaw-based dealer.
In Poland, central bank rate setter Jan Czekaj said on
Tuesday that interest rates might remain unchanged until the
current council completes its term in 2010, dampening
speculation of a further rate cut. []
STOCKS WEAKER, BONDS STRONGER
Regional stocks started the day slightly lower in a mild
correction to two-days of gains that drove Warsaw's main index
WIG20 <> to a nine-month high on Tuesday.
Bond yields also narrowed, helped by strong recent debt
sales by Poland and Hungary, which showed appetite for the
region's debt is rising and offered hope Budapest could wean
itself off IMF aid. [] []
Dealers said that mood could also aid currencies.
"The sentiment is still positive," said Henryk Sulek, dealer
at Millennium bank in Warsaw. "But (because of) summer
vacations, I would not expect significant changes until late
August."
The Polish finance ministry's debt department head Piotr
Marczak told Reuters that recent dollar bond issue has helped
the country meet its full-year foreign financing and created a
safety cushion for its domestic needs.
But if market conditions are positive, the ministry may opt
to issue Swiss franc, yen or euro-denominated bonds in the
months ahead. []
The Czech Republic is due to hold an auction later on
Wednesday.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.8 25.87 +0.27% +3.69%
Polish zloty <EURPLN=> 4.265 4.27 +0.12% -3.52%
Hungarian forint <EURHUF=> 271.6 271.95 +0.13% -2.96%
Croatian kuna <EURHRK=> 7.327 7.328 +0.01% +0.52%
Romanian leu <EURRON=> 4.232 4.235 +0.07% -5.14%
Serbian dinar <EURRSD=> 92.872 93.154 +0.3% -3.65%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +23 basis points to +153bps over bmk*
4-yr T-bond CZ4YT=RR +11 basis points to +188bps over bmk*
8-yr T-bond CZ8YT=RR +6 basis points to +303bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -8 basis points to +378bps over bmk*
5-yr T-bond PL5YT=RR -4 basis points to +305bps over bmk*
10-yr T-bond PL10YT=RR -5 basis points to +278bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -27 basis points to +715bps over bmk*
5-yr T-bond HU5YT=RR -62 basis points to +629bps over bmk*
10-yr T-bond HU10YT=RR -51 basis points to +516bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1157 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
(Reporting by Reuters bureaus, writing by Dagmara Leszkowicz,
editing by Patrick Graham)
