* Currencies trade broadly weaker
* Czech bond prices rise at 10-year auction
* Market eyes Hungary bond tender on Thurs
* Polish euro hopes suffer blow
(Adds details, updates prices)
By Dagmara Leszkowicz and Gergely Szakacs
WARSAW/BUDAPEST, April 22 (Reuters) - Central European
currencies eased slightly versus the euro late on Wednesday,
while a 10-year Czech bond sale drew healthy demand, boosting
prices on the back of improved sentiment.
The Czech Finance Ministry sold 0.802 billion crowns ($38.39
million) worth of 10-year government bonds <CZ1002471=> at an
average yield of 5.479 percent in the second, non-competitive
round of an auction on Wednesday [].
The average yield on the series dropped 14 basis points
compared to the first round of the auction held a month ago,
reflecting increased appetite for longer-dated debt.
Earlier on Wednesday, Czech dealers said comments from U.S.
Treasury Secretary Timothy Geithner that banks have sufficient
capital boosted markets, leading to strong local prices.
The crown <EURCZK=> traded weaker, however, shedding 0.32
percent versus the euro to trade at 27.059 to the euro at 1347
GMT.
In Hungary, the market was gearing up for the first bond
auction in months on Thursday where the debt agency AKK will
offer 5 billion forints worth each of 3-, 5- and 10-year
government bonds. []
Hungary has not sold government bonds since October except
for a pilot tender in February, but last week the AKK said it
would resume regular bond auctions every other week starting
April 23 <HUISSUE>.
It said it would also continue its buyback auctions started
in March to ease supply pressure on the market.
Bonds yields widened a little after Wednesday's buyback
auction, where the AKK "again managed to buy at the bottom of
the market," a dealer said.
"Those who have sold so much lately might buy some now,
although it's a question how much and at what level," he said.
"We have seen yields way higher than these, so it's definitely
possible that some people will try to force yields higher."
The forint <EURHUF=> was marginally weaker, easing 0.14
percent to the euro.
BLOW TO POLISH EURO HOPES
Poland's zloty <EURHUF=D2> fell over half a percent after
the regional heavyweight's ambitious plan to adopt the single
currency suffered a major blow on Wednesday when it conceded the
deficit would likely exceed the EU-norm 3 percent this year.
Statistics office showed the deficit at 3.9 percent of GDP
last year, well above the threshold set by the European Union's
Maastricht treaty for euro candidates and members and also above
a previous government estimate of 2.7 percent. []
In Romania, the leu <EURRON=> moved in tight ranges, lacking
a clear direction in the absence of local news.
"International developments remain key," ING Bank said in a
research note.
"The leu could continue to weaken in the coming sessions but
active price action could slow down around 4.30 per euro as
market players may hesitate to trade past these levels that have
seemed heavily guarded by the central bank in recent months."
"Given the size of the losses recorded by the leu in the
last weeks, central bank opposition in the coming sessions is
likely."
Dealers have said they suspected repeated central bank
covert interventions to defend the leu, mostly since the start
of the year up until last month, when Romania secured a 20
billion euro IMF-led deal.
The financial aid package, which is expected to be formally
signed next month, has helped the leu stabilise in recent weeks.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 27.059 26.972 -0.32% -1.13%
Polish zloty <EURPLN=> 4.427 4.404 -0.52% -7.05%
Hungarian forint <EURHUF=> 298.93 298.5 -0.14% -11.84%
Croatian kuna <EURHRK=> 7.422 7.391 -0.42% -0.77%
Romanian leu <EURRON=> 4.247 4.235 -0.28% -5.48%
Serbian dinar <EURRSD=> 93.56 93.217 -0.37% -4.36%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -7 basis points to 183bps over bmk*
4-yr T-bond CZ4YT=RR -3 basis points to +195bps over bmk*
8-yr T-bond CZ8YT=RR -2 basis points to +289bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -27 basis points to +896bps over bmk*
5-yr T-bond HU5YT=RR -61 basis points to +838bps over bmk*
10-yr T-bond HU10YT=RR -49 basis points to +750bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1547 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)
