* Romania leu leads gains as FX get bounce
* Polish stocks jump most since end-July
(Recasts with Polish stocks)
By Jason Hovet
PRAGUE, Sept 22 (Reuters) - Polish equities showed their
biggest gain in almost two months on Tuesday, while a weaker
dollar boosted central European currencies, with the leu leading
gains after the approval of an IMF loan tranche.
The rally follows an unexpectedly bullish summer in which
investor sentiment for riskier assets has pushed currencies and
stocks higher.
But many dealers still have one foot out the door because
they say assets look overvalued, while other risks including
ballooning budget gaps remain a risk to recovery.
Nevertheless, Poland's blue chip index <> bourse, the
region's largest and most liquid, jumped 4.4 percent on Tuesday
as dealers said worries over a wider correction had eased.
They said mostly foreign investors were showed strong
interest in the Polish bourse, which has lagged its peers with
only a 17.5 percent gain since June.
"The market has already passed a long consolidation and
we're having a rebound now," said Grzegorz Skowronski, broker at
UniCredit CAIB Securities. "There are no changes in
fundamentals, however concerns over a possible correction have
softened."
Poland and its larger domestic base has avoided the steep
economic fall of more export-reliant peers, but is still
struggling to contain a spiralling budget deficit. Still, most
market players have tipped the zloty to outperform central
European currencies due to a better economic outlook.
The zloty <EURPLN=> edged up to bid at 4.157 to the euro, in
its recent range but down from August highs of around 4.06.
Hungary's forint <EURHUF=> gained 0.1 percent to 271.05.
Dealers said currencies found support from euro/dollar, which
hit a one-year high on Tuesday. The rate is often a reference
for central European currencies.
GAINING GROUND
The leu <EURRON=> bid up 0.5 percent at 4.246 to the euro by
1244 GMT after the International Monetary Fund approved a
further $2.72 billion for Romania late on Monday, lending
support to the underperforming currency. []
"The IMF's approval of the next loan tranche is certainly
the kind of news that the leu needs to support it," said Simon
Quijano-Evans, strategist at Cheuvreux. "We continue to see the
RON as undervalued and look for EUR/RON to average 4.05 in 2010
versus 4.21 this year."
The leu has lagged the rebound in central European
currencies seen since March, and has dropped 1.7 percent since
June while the zloty gained more than 7 percent and the forint
almost 3 percent.
Romania followed Hungary earlier this year in securing an
IMF/European Union aid package to plug financing gaps as the
economic crisis tore into the region.
Like Hungary, Romania's central bank has held back on
interest rate cuts, leaving rates at the highest in the EU at
8.5 percent, although the IMF on Monday said more stability in
financial markets and declining inflation could provide room for
monetary easing.
Poland and the Czech Republic are mostly seen at the end of
their easing cycles. The Czech crown was flat at 25.125 per euro
before a central bank meeting this week that all analysts polled
by Reuters said would see no change to rates, already at a
record low of 1.25 percent.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.133 25.118 -0.06% +6.45%
Polish zloty <EURPLN=> 4.158 4.159 +0.02% -1.03%
Hungarian forint <EURHUF=> 271.05 271.36 +0.11% -2.77%
Croatian kuna <EURHRK=> 7.277 7.282 +0.07% +1.21%
Romanian leu <EURRON=> 4.246 4.265 +0.45% -5.45%
Serbian dinar <EURRSD=> 93.01 93.18 +0.18% -3.8%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +11 basis points to 202bps over bmk*
7-yr T-bond CZ7YT=RR +14 basis points to +184bps over bmk*
10-yr T-bond CZ10YT=RR -2 basis points to +166bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1443 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 []
Spot FX rates
Eastern Europe spot FX <EEFX=> Middle East spot FX <MEFX=>
Asia spot FX <ASIAFX=> Latin America spot FX <LATAMFX=>
Other news and reports
World central bank news [] Economic Data Guide <ECONGUIDE>
Official rates [] Emerging Diary []
Top events [] Diaries [] Diaries Index []
(Reporting by Reuters bureaus, writing by Jason Hovet, editing
by Stephen Nisbet)
