* Risk appetite helps region, zloty singled out as best bet
* Czech, Polish PMI at 2-yr high, Hungary PMI inches lower
* Bonds gain, Hungarian papers near multi-year highs
* Leu underperforms as c.bank seen intervening in mkt
* Romanian yields rise first time in 2010 at 3-yr tender
(Updates with Romania tender)
By Marton Dunai and Marius Zaharia
BUDAPEST/BUCHAREST, April 1 (Reuters) - Poland's zloty hit a
16-month high against the euro on Thursday, while yields rose
for the first time this year at a Romanian three-year bond
tender as the leu fell amid suspected central bank intervention.
The zloty extended its gains after the fastest quarterly
rise in a year in January-March as investors bet on a steady
recovery in the only economy in the European Union that grew
last year.
Data showed on Thursday Poland's Purchasing Managers' Index
(PMI) reached a 25-month high in March, indicating recovery was
on track, although analysts pointed out the index was lower than
expected. []
Czech PMI also hit a 2-year high, but Czech analysts also
warned that recovery will be far from smooth. Hungary's data
showed a slight decline but remained in positive territory.
[] []
At 1350 GMT, the zloty <EURPLN=> was up 0.4 percent, the
Hungarian forint <EURHUF=> was 0.3 percent stronger, while the
Czech crown <EURCZK=> traded near one-week highs having gained
0.2 percent on the day.
Romania's leu <EURRON=> underperformed, shedding 0.3 percent
to one-month lows, after a deputy central bank governor said
economic fundamentals did not justify further firming.
[]
The central bank has signalled concerns over the past month
that a stronger leu would hurt exporters and recovery.
Dealers said a jump in FX reserves in March reflected IMF/EU
aid flows, but also central bank interventions. []
The bank never comments on interventions, which dealers say
happen routinely.
"The central bank is intervening indirectly," a Bucharest
dealer said. "They've bought a lot of euros today and yesterday
through local banks."
Against the background of a weaker leu, hefty April supply
plans and concerns about budget figures so far this year, yields
rose for the first time in 2010 at a Romanian 3-year bond tender
[].
BONDS GAIN FURTHER
Bonds gained across the region as investors continued buying
emerging Europe's debt, betting that it had a more favourable
outlook than some countries on the fringes of the euro zone.
In Hungary, where debt supply has been particularly low and
local demand relatively strong, yields continued to attack
five-year lows at the short end and more than 2-year lows on the
longer end, a dealer said.
"The gains may be also fuelled by optimism that a strong
government will be formed after the (April) elections," one
dealer in Budapest said. "(But) a moderate correction in the
near future is quite possible after this rally."
Czech bonds also gained, with the yield on the 10-year bond
near its 2010 low, after data showed the 2009 budget deficit was
lower than previously estimated. []
"Dovish comments, low issuance, a eurobond in the pipeline,
and the strong crown," a dealer said. "There's no reason to sell
bonds."
Polish bonds have also gained recently despite concerns
voiced by the central bank over the breadth of the recovery in
central Europe's largest economy. []
The bank kept its main lending rate at a record low of 3.5
percent on Wednesday.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.344 25.403 +0.23% +3.84%
Polish zloty <EURPLN=> 3.841 3.857 +0.42% +6.85%
Hungarian forint <EURHUF=> 264.76 265.55 +0.3% +2.11%
Croatian kuna <EURHRK=> 7.27 7.27 0% +0.54%
Romanian leu <EURRON=> 4.107 4.094 -0.32% +3.18%
Serbian dinar <EURRSD=> 99.47 99.47 0% -3.61%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +1 basis points to 69bps over bmk*
7-yr T-bond CZ7YT=RR -7 basis points to +92bps over bmk*
10-yr T-bond CZ10YT=RR -6 basis points to +87bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -1 basis points to +353bps over bmk*
5-yr T-bond PL5YT=RR -1 basis points to +297bps over bmk*
10-yr T-bond PL10YT=RR -2 basis points to +242bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -13 basis points to +457bps over bmk*
5-yr T-bond HU5YT=RR -12 basis points to +397bps over bmk*
10-yr T-bond HU10YT=RR -22 basis points to +360bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1650 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus; writing by Gergely Szakacs and
Marius Zaharia; editing by Stephen Nisbet)
