* Forint touch down but off lows, bonds steady
* Crown continues technical rebound
* Stocks, other currencies mixed
(Updates throughout)
By Jason Hovet
PRAGUE, March 7 (Reuters) - Emerging European assets were
mixed on Monday, with the forint edging up from morning lows as
Hungary's centre-right government nominated two new central
bankers.
Hungary's ruling Fidesz party put two economists on the
central bank's seven-member Monetary Policy Council, but kept
two other open spots vacant for now -- leaving some market
uncertainty over future policy moves in place. []
Analysts expect government nominations to give the council a
looser policy bias, at least forestalling further rises in
interest rates and expectations of flat or looser monetary
policy has dragged on the forint. []
The two nominees balanced comments stressing the importance
of fighting inflation on Monday with a commitment to support
government policies as long as that did not threaten the bank's
main inflation-fighting objective. []
Commerzbank analyst Carolin Hecht said a reverse in policy
was unlikely due to European Union scrutiny, but that the forint
would stay under pressure until the full makeup of the new MPC
was clear. She added there was also risk from implementation of
government reform measures announced last week.
"Impact-wise for the forint, the two nominees are neutral,"
she said. "We have to wait until the other two are nominated...
There might be some surprise potential left."
By 1059 GMT, the forint <EURHUF=> bid less than 0.1 percent
up from Friday at 271.53 to the euro. Bond yields were flat.
The Polish zloty <EURPLN=> led losses with a 0.15 percent
drop, while the Czech crown <EURCZK=> gained less than 0.1
percent and the Romanian leu <EURRON=> dipped 0.1 percent.
Stock markets were also mixed but mostly down as unrest in
Libya unnerved investors. Dealers said a downgrade in Greece's
credit rating on Monday, and continued pressure on the zloty
would also drag on the region.
NO CLEAR DIRECTION
Emerging European currencies have given back some or all of
the gains seen at the start of this year and players said there
was no clear direction at the moment, with questions remaining
over monetary policy, especially after the ECB signalled it may
raise rates as soon as next month.
The zloty has retreated since the central bank left interest
rates on hold last week after beginning a tightening cycle in
January. Only half the market had expected a rate rise, while
others had expected it to wait until next month.
"People are trying to play euro/zloty, selling the zloty,
after rates were left unchanged. So this is pushing the region
higher," a Prague dealer said.
The crown, seen as a safe haven in the region, was gaining
on a technical rebound and also from speculation the Czech
central bank may begin tightening policy sooner than expected,
some dealers said.
Markets have priced in a first hike in June, and
shorter-dated forward rate agreements have risen to a year-high
in the past week.
"Although Middle East turmoil may weigh on regional
currencies, the technical picture looks rather supportive for
the crown after the EUR/CZK pair failed to break above the
55-day moving average," KBC said.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.243 24.259 +0.07% +3.12%
Polish zloty <EURPLN=> 3.979 3.973 -0.15% -0.53%
Hungarian forint <EURHUF=> 271.53 271.6 +0.03% +2.38%
Croatian kuna <EURHRK=> 7.405 7.42 +0.2% -0.34%
Romanian leu <EURRON=> 4.205 4.202 -0.07% +0.67%
Serbian dinar <EURRSD=> 103.55 103.37 -0.17% +2.3%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +5 basis points to 11bps over bmk*
7-yr T-bond CZ7YT=RR -4 basis points to +70bps over bmk*
10-yr T-bond CZ9YT=RR -3 basis points to +79bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -4 basis points to +473bps over bmk*
5-yr T-bond HU5YT=RR -3 basis points to +453bps over bmk*
10-yr T-bond HU10YT=RR -3 basis points to +401bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1158 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet; Editing
by Patrick Graham)
