* FX, bonds a touch up; Czech bond auction eyed
* Volatility high with Greece still in focus
(adds fixed income, detail, quote)
By Marius Zaharia
BUCHAREST, Feb 10 (Reuters) - Central European currencies
edged up on Wednesday in volatile trade, with all eyes on
reports of a potential rescue for Greece, overshadowing news of
privatisation inflows for Poland and a Czech debt tender.
Investors' concerns over highly-indebted Greece and other
euro zone economies have troubled the region's markets this year
and strategists say it is unlikely central European assets can
resume broader gains until those fears are quelled.
A senior German coalition source said on Tuesday European
governments have agreed to help Greece, but various options were
under consideration and no final decision had been taken
[]. Greece's problems are expected to dominate an
informal summit of EU leaders on Thursday.
"It cannot be expected that the situation will fully calm
down at least until Thursday when more can be known about what
the EU will do with Greek problems," Ceska Sporitelna analysts
said. "Today it can be expected to see nervous and cautious
trading showing volatility, without any significant direction."
By 1039 GMT, the Polish zloty <EURPLN=> was 0.4 percent
stronger, Hungary's forint <EURHUF=> gained 0.3 percent and the
Romanian leu <EURRON=> 0.2 percent. The Czech crown <EURCZK=>
was stable.
Currencies had lost overnight gains at the start of the
session, but recovered later in thin trade.
Bonds across the region were a shade firmer as well, but
traders said markets were firmly in wait-and-see mode, with
investors also eyeing a 15-year bond tender in Czech Republic at
around 1100 GMT. <CZ1002547=>
"Current ASW (asset swap spreads) might prove to be
attractive for some and generate some extra demand," Komercni
Banka dealers said.
"We do not see, however, any massive demand, as a paper of
such length is traditionally not being chased by domestic
investors."
LIKELY NORMALISATION
UniCredit analysts said a normalisation of Greece's
situation was "likely" and this would help narrow CDS spreads
across the region and boost currencies, with the zloty and the
leu benefiting the most.
Meanwhile, traders cited low volumes and increased
volatility due to the lack of further details.
High market volatility also forced mining group New World
Resources to withdraw an offer of 700 million euros of
equivalent senior secured notes on Wednesday [].
Investors were also watching Poland's ambitious
privatisation plan, one of the key market drivers since it was
launched last year.
Poland priced a 16 percent stake in utility ENEA <ENAE.WA>
at at 1.1 billion zlotys on Wednesday [].
"The disappointment on the Enea SPO at 16 zloty per share
(vs. the range of 15.5-17.) shows the fatigue in the market on
the strong increase in IPO/SPO supply, one reason we keep Polish
equities on neutral," Cheuvreux said in a note.
The government, determined to raise 27 billion zlotys from
privatisations in 2010, has already sold 10 percent of Europe's
No. 2 copper producer KGHM <KGHM.WA> and 13 percent of oil
refiner Lotos <LTOS.WA> this year.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 26.055 26.072 +0.07% +1.01%
Polish zloty <EURPLN=> 4.05 4.067 +0.42% +1.33%
Hungarian forint <EURHUF=> 270.28 271.14 +0.32% +0.03%
Croatian kuna <EURHRK=> 7.317 7.32 +0.04% -0.11%
Romanian leu <EURRON=> 4.113 4.122 +0.22% +3.02%
Serbian dinar <EURRSD=> 98.53 98.52 -0.01% -2.69%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -3 basis points to 99bps over bmk*
7-yr T-bond CZ7YT=RR +3 basis points to +142bps over bmk*
10-yr T-bond CZ10YT=RR -2 basis points to +127bps over
bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +1 basis points to +392bps over bmk*
5-yr T-bond PL5YT=RR -2 basis points to +330bps over bmk*
10-yr T-bond PL10YT=RR -3 basis points to +290bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -4 basis points to +555bps over bmk*
5-yr T-bond HU5YT=RR +7 basis points to +518bps over bmk*
10-yr T-bond HU10YT=RR -7 basis points to +466bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1239 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Marius Zaharia;
Editing by Patrick Graham)
