* FX, bonds edge up, euro zone data help
* Investors wait for EU Summit and rate meetings
* Serbia's dinar steady after c.bank gov resignation
By Marius Zaharia and Jason Hovet
BUCHAREST/PRAGUE, March 24 (Reuters) - The Romanian leu rose
to a 14-month high on Wednesday as central European currencies
and bonds held firmer in the face of doubts over a deal to help
debt-ridden Greece.
The Hungarian 10-year bond yield held around a 27-month low
below 7 percent it touched this week, moving lower with
short-term bond yields that reached five-year lows this month on
expectations of another interest rate cut.
Investors have bought up central European assets this year
on the view that a better economic recovery and more stable debt
positions make them better bets than some euro zone states.
Business sentiment in Germany, the region's main trading
partner, surged to its highest level since June 2008, improving
the outlook for the region's recovery []
The euro slumped to a 10-month low on Wednesday after Fitch
ratings agency downgraded Portugal's debt and euro zone leaders
wrangled over whether and how to help Greece, before the start
of a two-day European Union summit on Thursday. []
"Part of the euro outflows are entering CEE," a dealer in
Bucharest said.
The leu <EURRON=> bid 0.3 percent up on the day at 4.051 to
the euro by 1533 GMT, trading at its highest since January 2009.
Dealers said they expected central bank covert interventions
to weaken the leu in the event that the firming gathers pace.
The central bank has been in the market in the past, but does
not comment when it is.
RATES ON HOLD OR LOWER
Romanian and Hungarian central banks are seen cutting rates
next week, while Poland is expected to hold fire.
The Czech crown led gains in the region on Wednesday with a
0.4 percent rise to its highest in four sessions before a
Thursday rate meeting also seen holding interest rates at a
record low of 1 percent. []
Analysts expect Czech and Polish policy tightening in the
second half of the year. But currency strength and still
sluggish domestic demand may delay the timing, they say.
"No (Czech) rates change expected, but risks to less hawkish
rhetoric do exist as inflation pressures now seem to be lower
and FX is also way stronger than the central bank's forecasts,"
Komercni Banka traders said in a daily note.
Polish consumers also spent less than expected last month
and unemployment rose to its highest level in nearly three
years, data showed. Economists said this boosted the case for
keeping the main interest rate at a current all-time low of 3.5
percent for the rest of 2010 to avoid upsetting recovery.
"This is all a very bad prognosis for consumption, which so
far has driven the economy," said Michal Dybula, chief economist
at BNP Paribas in Warsaw. "Any talk of rate hikes this year is
nonsensical."
The Polish zloty <EURPLN=> was steady at 3.888, while the
Hungarian forint <EURHUF=> inched up 0.1 percent. Both have hit
15-month highs this month.
Serbia's dinar <EURRSD=> was 0.2 percent lower a day after
central bank Governor Radovan Jelasic announced his resignation
[]. The surprise statement pressured the unit on
Tuesday and forced the bank to intervene.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.33 25.443 +0.45% +3.9%
Polish zloty <EURPLN=> 3.888 3.887 -0.03% +5.56%
Hungarian forint <EURHUF=> 264.00 264.38 +0.14% +2.41%
Croatian kuna <EURHRK=> 7.26 7.259 -0.01% +0.68%
Romanian leu <EURRON=> 4.051 4.063 +0.3% +4.6%
Serbian dinar <EURRSD=> 99.628 99.56 -0.07% -3.76%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -1 basis points to 83bps over bmk*
7-yr T-bond CZ7YT=RR -7 basis points to +110bps over bmk*
10-yr T-bond CZ10YT=RR -4 basis points to +102bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -1 basis points to +379bps over bmk*
5-yr T-bond PL5YT=RR -2 basis points to +306bps over bmk*
10-yr T-bond PL10YT=RR -2 basis points to +245bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -3 basis points to +472bps over bmk*
5-yr T-bond HU5YT=RR -8 basis points to +415bps over bmk*
10-yr T-bond HU10YT=RR -6 basis points to +388bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1634 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaus, Writing by Marius Zaharia and
Jason Hovet; Editing by Patrick Graham)
