* Currencies slightly stronger, eyes on Greece
* Czech tender signals finmin may want to issue fx paper
(adds fixed income, detail, quotes)
By Marius Zaharia
BUCHAREST, Feb 11 (Reuters) - Central European currencies
inched higher early on Thursday as hopes for a deal to rescue
Greece increased during a European Union summit, although
markets were waiting for more details.
Fears over the highly-indebted euro zone's periphery have
dented risk appetite and rattled emerging European currencies,
but many market players have started to price in a rescue deal
for Greece, which will calm nerves. []
A Spanish EU source said a Greek aid deal was likely to be
finalised by Tuesday [].
At 1111 GMT, the Czech crown <EURCZK=>, the Polish zloty
<EURPLN=>, the Romanian leu <EURRON=> and the Hungarian forint
<EURHUF=> were all 0.2-0.3 percent stronger on the day.
"News on Greece keeps on coming and a bailout becomes more
and more obvious, so risk aversion is slowly fading," one dealer
in Bucharest said. "However, the market has few details about it
so gains are limited."
Some market watchers expect regional assets to return to a
trend of broader gains seen at the start of the year once fears
over Greece are tamed, but there are substantial risks ahead
from elections this year and rising debt levels.
Among currencies, investors may favour the zloty, which
benefits from Poland's stronger growth outlook and the leu,
which has to catch up with its peers after lagging in a rally in
the second half of last year.
However, risk appetite will not gain full speed as a Greek
bailout will not solve euro zone's debt problems, with worries
still lingering over countries such as Portugal or Spain.
CZECHS MAY TURN TO FX BORROWING
Czech bonds were quiet on Thursday, a day after the Finance
Ministry cut a 15-year bond auction in half.
The move was a surprise to markets, especially after more
foreign demand appeared for both the Czech auction and a Polish
2-year bond tender due to some easing concerns over Greece.
[] []
Also, dealers say that some investors spooked by debt
problems in the euro zone's periphery may look to increase
exposure in central Europe, where some countries have already
started a fiscal tightening effort.
But some say the ministry's statement that it decided to cut
the auction due to a 15 basis points rise in yields, hinted the
country could look soon to issuing on foreign debt markets.
"The statement is surprising as MoF very rarely comments on
auction results and suggests that a Eurobond issue might be
nearing," Komercni Banka dealers said in a morning market note.
"The message seems to be strong that any further widening in
ASW might be limited by issuer's reluctance to accept."
Hungarian bonds were flat after an auction in which the
government sold a planned 50 billion forints worth of paper. The
tender saw hefty demand, but accepted yields were higher than at
previous tenders for 5- and 10-year paper. []
Polish bonds were little changed on Thursday after yields
fell several basis points following Wednesday's successful
tender.
In Czech Republic, data showed industrial output rose 1.8
percent on the year in December, slightly lower than a
preliminary estimate [], but the crown showed no
visible reaction.
At 1300 GMT Poland releases 2009 trade data.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 26.033 26.078 +0.17% +1.09%
Polish zloty <EURPLN=> 4.047 4.06 +0.32% +1.41%
Hungarian forint <EURHUF=> 270.82 271.23 +0.15% -0.17%
Croatian kuna <EURHRK=> 7.32 7.321 +0.01% -0.15%
Romanian leu <EURRON=> 4.105 4.111 +0.15% +3.23%
Serbian dinar <EURRSD=> 98.617 98.54 -0.08% -2.78%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -6 basis points to 96bps over bmk*
7-yr T-bond CZ7YT=RR +4 basis points to +140bps over bmk*
10-yr T-bond CZ10YT=RR 0 basis points to +128bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -1 basis points to +388bps over bmk*
5-yr T-bond PL5YT=RR -1 basis points to +328bps over bmk*
10-yr T-bond PL10YT=RR -1 basis points to +292bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -3 basis points to +548bps over bmk*
5-yr T-bond HU5YT=RR -3 basis points to +515bps over bmk*
10-yr T-bond HU10YT=RR +3 basis points to +461bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1311 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Marius Zaharia
Editing by Andy Bruce)
