* Stocks' rise supports FX as calming looks near
* Bond auctions on radar as Hungary restarts sales
* Polish euro ambitions suffer blow on deficit
(Adds details, fixed income)
By Dagmara Leszkowicz
WARSAW, April 22 (Reuters) - A rise in emerging European
stocks buoyed currencies on Wednesday, while the Polish zloty
edged lower with dealers expecting some market calming after
pulling back this week from highs hit a week ago.
Analysts said International Monetary Fund pledges to aid
emerging markets in the global downturn help calm nerves in
central and eastern Europe, among the hardest hit regions in the
global downturn as credit and capital flows dwindle.
The zloty <EURPLN=> shed 0.3 percent to 4.415 percent by
1025 GMT, but mostly shrugged off 2008 government deficit
figures that struck a blow to Poland's euro ambitions.
Hungary's forint <EURHUF=> added 0.2 percent, the Czech
crown <EURCZK=> was a tad down at 27.005 to the euro, while
Romania's leu <EURRON=> tipped lower to 4.239, down 0.1 percent.
"I would say currencies in the region are to stabilise
soon... The IMF support will surely help in such a scenario,"
said Christian Keller, emerging markets chief economist at
Barclays Capital.
Last week Poland announced it would seek a $20.5 billion
flexible credit facility from the International Monetary Fund
(IMF), boosting the zloty to a 3-month high.
Hungary and Romania have both reached out for aid packages
that come with stricter fiscal burdens, but the Czech Republic
has said it had no need for outside aid now.
The IMF rally for the zloty has reversed, though, and
dealers said any moves on the FX market will depend for now on
the stock market, with first quarter results on the way.
Stocks in central Europe rose on Wednesday, led by banks
after Tuesday comments from U.S. Treasury Secretary Timothy
Geithner that banks have sufficient reserves lifted sentiment.
The region's stock markets have strengthened some 20-30
percent since late-February, after losing around half their
value last year.
Currencies have gained 4-11 percent in the same time, led by
the zloty, although are still 10-25 percent down from
mid-August.
DIFFRENTIATION
Analysts said possible stability refers mainly to the Czech
crown and the Polish zloty, where the economic and financing
situation is better than in other countries in the region.
"As for the zloty and crown I see slow recovery, although we
must remember that high volatility is likely to remain further,"
said Urlich Leuchtmann, emerging market analyst at Commerzbank.
Poland said on Wednesday that the general government deficit
exceeded the key 3 percent ceiling in 2008 and will likely do so
again in 2009. []
Some analysts said that with the euro adoption rules as they
are Poland would need to meet budget rules next year, which
could prove a challenge as 2009 growth is seen managing 0.8
percent in analysts' polls.
On bond markets, investors watched for a 10-year Czech bond
auction on Wednesday that would be another test for appetite on
the long-end. Hungary was set to restart on Thursday its first
regular auctions since last autumn, when the escalating
financial crisis crushed central Europe's debt markets.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 27.005 26.972 -0.12% -0.93%
Polish zloty <EURPLN=> 4.415 4.404 -0.25% -6.8%
Hungarian forint <EURHUF=> 297.8 298.5 +0.24% -11.5%
Croatian kuna <EURHRK=> 7.423 7.391 -0.43% -0.78%
Romanian leu <EURRON=> 4.239 4.235 -0.09% -5.3%
Serbian dinar <EURRSD=> 93.5 93.217 -0.3% -4.3%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -2 basis points to 189bps over bmk*
4-yr T-bond CZ4YT=RR -3 basis points to +195bps over bmk*
8-yr T-bond CZ8YT=RR +1 basis points to +291bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -7 basis points to +404bps over bmk*
5-yr T-bond PL5YT=RR -1 basis points to +352bps over bmk*
10-yr T-bond PL10YT=RR -1 basis points to +302bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -25 basis points to +903bps over bmk*
5-yr T-bond HU5YT=RR -59 basis points to +855bps over bmk*
10-yr T-bond HU10YT=RR -47 basis points to +762bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1225 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Dagmara
Leszkowicz)
