* Euro declines halts, manufacturing outlook better
* Hungarian bond yields drop from high, Polish sale awaited
(adds bonds, stocks, details)
PRAGUE, Dec 1 (Reuters) - Emerging European currencies rose
on Wednesday on a better outlook given in manufacturing surveys,
and as a pause in the euro's decline gave breathing room to
recoup some of last week's losses.
Mounting worries the euro zone's debt crisis will not end
with a bailout of Ireland have this week sent emerging Europe's
reference currency, the euro, lower against the dollar -- a
currency pair the region typically tracks.
Planned pension changes to help shore up the budget in
Hungary, along with an ongoing battle between the government and
central bank, have also hit investor sentiment in the region.
Markets were digesting a report that Poland could also
introduce significant pension reforms as part of efforts to rein
in public debt. The government may temporarily reduce the amount
of cash it transfers into the country's private pension funds by
partly substituting government bonds, a senior government source
told Reuters.
Poland is due to unveil changes to its private pension funds
this week.
The Hungarian forint <EURHUF=> added 0.3 percent and was
close to the 280 per euro level. The zloty <EURPLN=> rose a
touch, off earlier highs but testing the key 4.0 per euro level.
Both currencies were still down as much as 1.6 percent from
a week ago and they still trended toward weakness.
"There is a very strong correlation between the euro/dollar
chart and the forint and Hungarian bonds and this morning's
moves can be traced back to that," a Budapest fixed income
trader said. "The euro periphery opened quite well, although who
knows how long that will last?"
Hungarian government bond yields dropped by about 20 basis
points after touching 15-month highs this week after a surprise
interest rate hike on Monday by the central bank in Hungary, the
first to begin undoing two years of crisis-driven loosening.
Stock markets were strong, rising 1-2 percent with Budapest
<> in the lead.
The Czech crown <EURCZK=> added 0.2 percent after bouncing
off the psychological 25 per euro level, and the Romanian leu
<EURRON=> was steady at 0833 GMT.
PMI STRONG
Polish 2-year bond yields edged lower before a 1100 GMT
auction of the paper.
Poland's Purchasing Managers' Index (PMI) rose to a 6-1/2
year high, Markit Economics said on Wednesday, a day after
third-quarter economic growth data was better than forecast. The
stronger data added to arguments for the central bank to start
tightening policy. []
Czech PMI crept up and was among the strongest in the
region. [] Hungary's PMI, calculated under a
different methodology, rose higher above the breakeven 50 level
that separates expectations of manufacturing expansion from
contraction. []
"The (Polish) data bodes well for the industrial output
reading in November and for economic growth in the fourth
quarter, which may be a touch better than in the third," Piotr
Bielski, senior economist at Bank Zachodni WBK, said.
The European Commission forecast this week a steady recovery
in central Europe, which relies a lot on trade with the euro
zone, especially with Germany. Growing trade is expected to lift
the region's currencies over the next year. []
<CEEFXPOLL01>
Investor anxieties have been stoked in Europe's emerging
markets by Hungary's centre-right Fidesz government.
The government has given taxpayers until the end of January
to return to the state pension scheme or face drastic cuts in
future entitlements, a move that private funds have denounced as
"outright blackmail". []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.903 24.955 +0.21% +5.68%
Polish zloty <EURPLN=> 4.021 4.022 +0.02% +2.06%
Hungarian forint <EURHUF=> 280.54 281.23 +0.25% -3.63%
Croatian kuna <EURHRK=> 7.423 7.423 0% -1.53%
Romanian leu <EURRON=> 4.295 4.296 +0.02% -1.34%
Serbian dinar <EURRSD=> 107.35 107.35 0% -10.68%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -4 basis points to 87bps over bmk*
7-yr T-bond CZ7YT=RR -1 basis points to +83bps over bmk*
10-yr T-bond CZ9YT=RR -1 basis points to +104bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -6 basis points to +384bps over bmk*
5-yr T-bond PL5YT=RR -6 basis points to +371bps over bmk*
10-yr T-bond PL10YT=RR -20 basis points to +322bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -24 basis points to +687bps over bmk*
5-yr T-bond HU5YT=RR -27 basis points to +635bps over bmk*
10-yr T-bond HU10YT=RR -27 basis points to +547bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1117 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
For related news and prices, click on the codes in brackets: All
emerging market news []
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(Reporting by Reuters bureaus, writing by Jason Hovet, editing
by Stephen Nisbet)
