* FX pull back from recent highs, zloty still seen strong
* Leu inches up, off a one-month peak
* Czech, Polish, Hungarian bond auctions on deck
(Adds bonds, details)
By Jason Hovet
PRAGUE, March 3 (Reuters) - The Polish zloty slipped from a
14-month peak on Wednesday as central European currencies ran
into resistance following recent gains spurred by an improving
economic outlook.
The Romanian leu, however, bucked the trend, gaining 0.1
percent and staying close to a one-month high after consumption,
the largest part of the country's economy, rose 1.1 percent on
the quarter in October-December. []
Romanian consumption data followed a stronger-than-expected
report on Poland's economy on Tuesday and surveys showing
manufacturing on the rise -- all of which had lifted currencies
in the region. []
The leu <EURRON=> was up at 4.1 to the euro by 0953 GMT. The
zloty <EURPLN=> fell 0.4 percent to 3.926 to the euro, but still
leads the region this year having gained 4.5 percent so far.
"The latest economic data from Poland confirms economic
recovery, but we are slowly getting to a major resistance level
of 3.90," a Warsaw dealer said.
Hungary's forint <EURHUF=> slipped 0.3 percent on the day to
266.79, off a seven-week high hit overnight.
The Czech crown <EURCZK=> dipped to 25.779 per euro. The
International Monetary Fund said on Tuesday the country's
exchange rate was in line with fundamentals. []
Greece's struggle to reign in its budget deficits has raised
market volatility in the region and pushed the euro, central
Europe's reference currency, to a 9-1/2 month low against the
dollar this week. []
But it has also highlighted central Europe's better debt
position, boosting assets and often breaking the usual
correlation the region's currencies have with the euro/dollar.
On Wednesday the euro rose after a source said Greece's
cabinet had approved a sweeping new austerity programme.
[]
BOND AUCTIONS
Analysts said the quarterly recovery in Romanian consumption
signalled the economy may enter positive territory in 2010.
"The improvement in consumption is a positive signal that
things are going in the right direction," said Nicolaie
Alexandru Chidesciuc of ING Bank in Bucharest.
"However, data are still bad and despite a recovery in
consumption you still need monetary policy easing. We see a 50
basis point cut at the next (central bank) meeting."
Romanian and Hungarian policymakers are expected to ease
interest rates further this year. Czech and Polish rates have
already dropped to all-time lows, and analysts see tightening in
the second half of the year.
Polish and Hungarian bond markets were looking to a midday
switch tender.
The Czechs auction bonds due 2019 <CZ1002471=>, whose yield
has dropped to a one-month low of 4.127/3.999 percent, were down
40 basis points from a February peak.
"The amount offered shall be sold easily, though, the risk
may be that MoF sells a higher amount as prices might look more
attractive to them now compared to the last few openings in
which they sold smaller amounts," Komercni Banka dealers said.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.779 25.751 -0.11% +2.09%
Polish zloty <EURPLN=> 3.926 3.911 -0.38% +4.53%
Hungarian forint <EURHUF=> 266.79 266.04 -0.28% +1.33%
Croatian kuna <EURHRK=> 7.257 7.261 +0.06% +0.72%
Romanian leu <EURRON=> 4.102 4.104 +0.05% +3.3%
Serbian dinar <EURRSD=> 99.56 99.6 +0.04% -3.7%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +6 basis points to 92bps over bmk*
7-yr T-bond CZ7YT=RR -1 basis points to +124bps over bmk*
10-yr T-bond CZ10YT=RR -2 basis points to +100bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1054 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet; Editing
by Susan Fenton)
