* Zloty hits 15-mth, forint 17-wk high
* Govt debt, stocks firm on FX strength, global mood
* Leu flat, Romanian bills firm on rate cut expectation
(Adds fresh prices, comments.)
By Dagmara Leszkowicz and Sandor Peto
WARSAW/BUDAPEST, March 8 (Reuters) - Emerging European
assets firmed on Monday as concerns over Greece's debt crisis
eased and the euro <EUR=>, the region's reference currency, held
on to its gains against the dollar.
The zloty hit 15-month highs, the Czech crown three-month
highs and the forint 17-week highs against the euro.
The strength of the region's currencies can lend continued
support to government debt and stocks, which also extended the
past weeks' gains, market players said.
"The Greek sovereign debt crisis seems to be peaking for now
and the favourable winds have returned to most emerging
markets," Nordea said in a note. "We therefore remain optimistic
on our emerging market currencies from a short-term
perspective."
At 1500 GMT, Poland's zloty <EURPLN=>, Hungary's forint
<EURHUF=> and the crown <EURCZK=> were firmer by 0.2 percent
from Friday, though retreating slightly from intraday peaks.
The region's main stock indices rose by 0.4-1.2 percent.
Jobless rates remain high across the recession-hit region
and the Czech unemployment rate rose to a slightly lower than
expected 9.9 percent in February from 9.8 percent in January.
But economic recovery and capital inflows are seen
strengthening the region's currencies further over the next
year, though a Reuters poll showed some retreat was in the
pipeline. []
Poland has been the only country that escaped recession and
the zloty is expected to lead gains in the region.
Analysts have said the forint could come under pressure
around elections in April. The Czech crown is also close to
levels where profit-taking could curb gains, dealers said.
"Things are a bit overdone so we might see some
profit-taking take us up to 25.700 (from 25.602 at 1500 GMT)," a
crown dealer said. "Overall, people are still mostly short euro
against (the) CEE-4 (currencies)."
HIKES AND CUTS
Analysts also attributed the zloty's recent sharp gains
partly to comments from Monetary Policy Council (MPC) members
who signalled possible interest rate hikes later in the year.
Polish bonds joined a firming of government debt in the
region on Monday even after rate hike expectations flattened
Polish bonds curve last week.
Romanian yields fell further at a six-month T-bill auction,
where the country sold 1.33 billion lei worth of paper, more
than planned. []
The leu <EURRON=>, however, remained flat due to concerns
that the central bank could intervene if the unit -- the second
best performer in the region this year after the zloty -- firmed
further.
Yields fell as Romania's central bank is expected to cut
further its interest rates which are the highest in the region.
Romania begins a roadshow for a planned 1 billion euro bond
issue on Monday.
Expectations for another cut in the Hungarian central bank's
5.75 percent base rate also helped government debt yields there
to drop further by about seven basis points, with three-year
bond yields trading at four-year lows around 6.45 percent.
Polish and Hungary's key interest rates stand at all-time
lows of 3.5 percent and 5.75 percent respectively.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.602 25.662 +0.23% +2.8%
Polish zloty <EURPLN=> 3.868 3.877 +0.23% +6.1%
Hungarian forint <EURHUF=> 265.89 266.48 +0.22% +1.68%
Croatian kuna <EURHRK=> 7.262 7.255 -0.1% +0.65%
Romanian leu <EURRON=> 4.089 4.089 0% +3.63%
Serbian dinar <EURRSD=> 99.699 99.59 -0.11% -3.83%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -2 basis points to 80bps over bmk*
7-yr T-bond CZ7YT=RR -2 basis points to +118bps over bmk*
10-yr T-bond CZ10YT=RR -3 basis points to +94bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -2 basis points to +405bps over bmk*
5-yr T-bond PL5YT=RR -2 basis points to +321bps over bmk*
10-yr T-bond PL10YT=RR -2 basis points to +274bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -2 basis points to +510bps over bmk*
5-yr T-bond HU5YT=RR -2 basis points to +447bps over bmk*
10-yr T-bond HU10YT=RR -3 basis points to +413bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1600 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
For related news and prices, click on the codes in brackets:
All emerging market news []
Spot FX rates Eastern Europe spot FX <EEFX=>
Middle East spot FX <MEFX=> Asia spot FX <ASIAFX=>
Latin America spot FX <LATAMFX=>
Other news and reports
World central bank news [] Economic Data Guide <ECONGUIDE>
Official rates [] Emerging Diary []
Top events [] Diaries [] Diaries Index []
(Reporting by Reuters bureaus, Writing by Dagmara
Leszkowicz/Sandor Peto; Editing by Ruth Pitchford, John
Stonestreet)
