* Currencies mixed but moves insignificant, mkts await ECB
* Czech bonds firm, Polish bonds flat but may gain further
(Adds fixed income, detail)
By Dagmara Leszkowicz
WARSAW, Sept 2 (Reuters) - Central European currencies were
largely flat on Thursday as investors refrained from taking
fresh positions ahead of the results of a policy-setting meeting
at the European Central Bank.
Analysts expect the ECB to extend its liquidity safety net
to banks, delaying its exit from emergency support measures
aimed at nursing a still-fragile euro zone recovery.
"If the ECB's Governing Council decides to extend 3-month
repo operations, this should support the zloty (due to access to
cheap financing)," analysts at BPH bank wrote in a note.
By 0916 GMT the zloty <EURPLN=> was 0.1 percent stronger,
while the Czech crown <EURCZK=> and Hungary's forint <EURHUF=>
were each a touch down against the euro. Romania's leu <EURRON=>
was 0.1 percent weaker.
Currencies in the region rebounded on Monday as solid U.S
manufacturing data and mostly strong PMI readings in eastern
Europe boosted riskier assets. Hungary's forint led the gains,
and has jumped more than 1 percent since Tuesday.
The forint had been hard-hit in recent days, especially
against the Swiss franc, raising concerns over Hungary's growth
prospects as many households there have Swiss franc mortgages
and face potentially crippling rises in loan payments.
Prime Minister Viktor Orban's spokesman said on Thursday
Hungary's economy was stable and there was no need to hold
negotiations with the International Monetary Fund (IMF) about a
new loan. []
Hungary's talks with the IMF and EU about a review of its
current financing deal collapsed in July. This deal, which was
secured in October 2008, runs out next month.
Many analysts and officials say the country may need such
support if global sentiment turns negative.
BONDS STRONG
Czech bond yields were some 5 basis points lower across the
curve, dropping for the second consecutive day after a 5-year
bond tender showed healthy demand.
The Czech finance ministry plans to offer 50 billion crowns
in government bonds in the last three months of 2010, but market
players said the market should easily absorb such an amount.
Polish bonds were stable and some analysts say the 2011
budget draft, which the cabinet is expected to approve on
Friday, should provide some support for government debt.
Poland and the Czech Republic face record borrowing needs
but are seen as better placed for economic recovery than other
countries in the region and so have had no problems placing
their debt at reasonable prices so far.
Elsewhere, Romania's finance ministry tenders 300 million
lei in 5-year paper, and analysts widely expect the ministry
again to reject all bids as buyers are likely to ask yields
above the self-imposed 7 percent cap.
Earlier this week, the ministry signalled it would stick to
its self-imposed cap on debt yields and focus on short-term
funding and euro issues, a tactic which analysts say is
unsustainable. []
The Romanian finance ministry has failed to meet its
issuance plans in the past few months due to its current
strategy and it has only completely met market demand at its
auctions of paper carrying maturities of up to six months.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.692 24.697 +0.02% +6.59%
Polish zloty <EURPLN=> 3.964 3.967 +0.08% +3.53%
Hungarian forint <EURHUF=> 284.4 284.5 +0.04% -4.94%
Croatian kuna <EURHRK=> 7.278 7.273 -0.07% +0.43%
Romanian leu <EURRON=> 4.26 4.257 -0.07% -0.53%
Serbian dinar <EURRSD=> 105.317 105.42 +0.1% -8.96%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -2 basis points to 115bps over bmk*
7-yr T-bond CZ7YT=RR -4 basis points to +103bps over bmk*
10-yr T-bond CZ9YT=RR 0 basis points to +102bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -1 basis points to +405bps over bmk*
5-yr T-bond PL5YT=RR -2 basis points to +392bps over bmk*
10-yr T-bond PL10YT=RR -2 basis points to +320bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1116 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;
Editing by Hugh Lawson)
