* Weaker Swissie helps forint, other FX mostly steady or up
* Bonds rally loses steam, Romania debt sale watched
* Anti-austerity protests planned in Bucharest, Prague
(Adds bonds, quotes, updates prices)
By Jason Hovet
PRAGUE, Sept 20 (Reuters) - The forint led currency gains in
central Europe on Monday, approaching a three-week high hit at
the end of last week with the help of a weak Swiss franc, while
the Romanian leu was slightly lower ahead of a sale of 6-month
bills.
Central European currencies have moved back to higher ground
after some weakness in the past month and with a lack of key
data for now, dealers said technical levels have started
providing resistance to sharp moves.
Markets may be tested later this week by anti-austerity
protests in Bucharest and Prague, while Budapest starts talks
with unions on wage proposals. But analysts say the region's
governments are unlikely to be deterred from budget cuts.
The forint <EURHUF=> rose 0.3 percent to 281.26 to the euro
by 0953 GMT, near last week's highs. The Hungarian currency's 6
percent rise versus the franc <CHFHUF=> in the past two weeks
has translated into gains against the euro, its main reference.
Hundreds of thousands of Hungarian households that have
taken out foreign currency mortgages have seen their repayments
rise due to a franc rally that drove the forint to record lows
against the Swiss currency earlier this month.
"The weakness of the franc should ease pressure on the
forint," RBC Capital Markets wrote in a Monday report.
BONDS, PROTEST
But the stronger forint failed to lift government bonds as
it has in the past, and dealers said a recent rally has cooled
ahead of Oct. 3 municipal elections.
Czech and Polish bond markets have also cooled after a
summer rally that sent yields to new lows thanks to falling
supply, improving fiscal outlooks and a rally in core markets.
The Czech benchmark 2019 bond <CZ1002471=> yield is up 10
basis points in the past two weeks after hitting a low of 3.15
percent.
"We tend to believe that certain stabilization on the
long yields after recent rally is ahead of us," KBC said in a
mid-morning trade note.
"For the week ahead a lot should depend on the FOMC meeting
and European flash PMI, which should set the tone for the core
markets."
The Polish zloty <EURPLN=> added 0.25 percent and the Czech
crown <EURCZK=> was down a touch.
Romania's leu <EURRON=> edged down 0.3 percent, with markets
watching the tender of 6-month bills later on Monday to see if
the finance ministry keeps a de facto 7 percent yield cap in
place.
Analysts say the ministry has painted itself into a corner
by refusing to sell bonds at yields higher than 7 percent and
faces a funding crunch in November when yields could jump by up
to 1 percentage point. []
Protests could also pose a particular challenge in Romania,
where unions are traditionally stronger than in other central
European states and the government is struggling to keep a 20
billion euro IMF aid deal on track.
Romania's parliament passed a pension reform bill last week
but the weakened government faces battles in passing other
bills, including a value-added tax hike.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.669 24.652 -0.07% +6.68%
Polish zloty <EURPLN=> 3.948 3.958 +0.25% +3.95%
Hungarian forint <EURHUF=> 281.26 282.06 +0.28% -3.88%
Croatian kuna <EURHRK=> 7.281 7.282 +0.01% +0.39%
Romanian leu <EURRON=> 4.265 4.252 -0.3% -0.65%
Serbian dinar <EURRSD=> 105.43 105.34 -0.09% -9.06%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -2 basis points to 96bps over bmk*
7-yr T-bond CZ7YT=RR +1 basis points to +87bps over bmk*
10-yr T-bond CZ9YT=RR -3 basis points to +90bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -1 basis points to +385bps over bmk*
5-yr T-bond PL5YT=RR -6 basis points to +361bps over bmk*
10-yr T-bond PL10YT=RR -3 basis points to +300bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -7 basis points to +580bps over bmk*
5-yr T-bond HU5YT=RR -4 basis points to +542bps over bmk*
10-yr T-bond HU10YT=RR -8 basis points to +442bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1154 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet;
Editing by Ruth Pitchford, John Stonestreet)
