* Hungary forint holds near 11-month highs vs euro
* Hungarian yields fall to six-month lows
* Crown eases after weaker than expected trade data
By Radu Marinas
BUCHAREST, April 6 (Reuters) - Central European currencies
extended gains on Wednesday on rising stocks, with the Hungarian
forint <EURHUF=> holding near an 11-month high on optimism over
Budapest's fiscal reforms that also brought its yields to
six-month lows.
European shares hit a four-week high on Wednesday as growing
optimism about a global economic recovery improved sentiment.
[]
By 1120 GMT, the forint was up 0.4 percent at 263.08 per
euro, holding near an 11-month high hit the previous day. The
Polish zloty <EURPLN=> rose 0.1 percent while the Romanian leu
<EURRON=> was up 0.4 percent.
The Czech crown <EURCZK=> edged down 0.1 percent.
"For the time being, it's a one-way street (for the
forint)," said one dealer in Budapest.
"The forint has been outperforming its peers in the last two
weeks, suggesting that there could be country-specific factors
behind the trend," KBC said in a research note.
"The 262.00 level could be the next strong resistance, which
may test the strength of the current trend," it added.
Hungarian government bonds strengthened as yield declines
which began on Tuesday triggered short covering. Yields fell 5
basis points with 3-year bonds trading at 6.40 percent.
One Budapest-based trader said the rally could march through
Thursday's bond auctions <HUISSUE>.
Yields on Hungarian interest rate swaps and forward rate
agreements have also fallen, pricing out the probability of a
central bank rate increase later this year and now indicating a
greater chance of a small rate cut.
"The status quo has broken up, investors on short (in
Hungarian bonds) are panicking ... U.S. investors have been
permanently buying (for weeks)," said one trader.
"But sellers have disappeared by now and people on short are
in flight."
Hungary's central bank will publish the minutes of its March
rate meeting at 1200 GMT. It left its key base interest rate
unchanged at 6 percent <NBHI> in March.
That was the first rate meeting attended by three of the
bank's four new rate setters picked by the ruling Fidesz party.
The government is also expected to discuss the euro convergence
programme in a first reading later on Wednesday, preparing the
groundwork for eventual adoption of the euro currency.
Poland's zloty rose slightly after firming to beyond 4.000
against the euro the previous day, following an expected
interest rate hike by 25 basis points to 4.0 percent and the
prospect of more rate increases on the horizon. []
"The statements from the central bank's governor, suggesting
further steps towards monetary policy tightening, can support
the zloty and put pressure on yield growth," analysts at Pekao
bank wrote in their morning research note.
Helped by the central bank's plan to inject 6.2 billion
zlotys ($2.2 billion) from its 2010 net profit into the state
budget, Polish bond prices edged up. []
"It is positive information but there has already been some
talk in the market about it. The market has generally been in a
short-term growth trend recently," BRE Bank's bond trader Pawel
Bialczynski said.
The Czech crown pulled back from a 2-1/2 week high of 24.350
hit at the start of the session following data in what dealers
said was mostly a correction after holding for several weeks in
a range between 24.332 and 24.587.
Czech industrial output rose 13.0 percent in February from
the same month last year, below expectations for a 13.7 percent
rise, after a revised 16.4 percent increase the previous month.
Data also showed foreign trade posted a 13.75 billion crown
($2.5 billion) surplus, smaller than analysts' forecasts for a
15.0 billion surplus. []
The Czech Finance Ministry sold 5.962 billion crowns ($349
million) worth of 4.00/17 government bonds <CZ1001903=> in the
first, competitive round of bidding at an auction on Wednesday.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.373 24.346 -0.11% +2.57%
Polish zloty <EURPLN=> 3.993 3.997 +0.1% -0.88%
Hungarian forint <EURHUF=> 263.08 264.05 +0.37% +5.66%
Croatian kuna <EURHRK=> 7.368 7.367 -0.01% +0.16%
Romanian leu <EURRON=> 4.101 4.108 +0.17% +3.22%
Serbian dinar <EURRSD=> 101.74 102.36 +0.61% +4.12%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR 0 basis points to -8bps over bmk*
7-yr T-bond CZ7YT=RR -1 basis points to +59bps over bmk*
10-yr T-bond CZ9YT=RR -1 basis points to +68bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +1 basis points to +318bps over bmk*
5-yr T-bond PL5YT=RR -2 basis points to +300bps over bmk*
10-yr T-bond PL10YT=RR -4 basis points to +271bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -6 basis points to +428bps over bmk*
5-yr T-bond HU5YT=RR -6 basis points to +406bps over bmk*
10-yr T-bond HU10YT=RR -6 basis points to +454bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1153 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus; Editing by Hugh Lawson)
