* FX steady, find support in stocks
* Hungary's bond auctions attract bids, sales to continue
* Region's bonds market seen to recover slowly
(Updates with bond auctions, updates prices)
By Dagmara Leszkowicz and Jason Hovet
WARSAW/PRAGUE, April 23 (Reuters) - Hungarian bond yields
held steady after strong demand in the country's first bond
auctions in months, while rising stock prices helped keep
emerging Europe's currencies steady.
The auctions were only Hungary's second batch of issuance
since a halt to debt sales in October, when the global financial
crisis rushed through central Europe causing a sell-off in bonds
and pushing Hungary toward a $25 billion IMF lifeline.
Hungary sold almost all bonds offered in the three auctions
and the debt agency said it would continue with regular sales
after demand was several times oversubsribed. []
Analysts said it could be another signal investors are
returning to central European debt following well-bid auctions
in the Czech Republic and Poland over the past month.
"The fact that this auction was successful... the market
might be trying to strengthen or improve the duration exposure
in their portfolios," said Luis Costa, Commerzbank's head of
emerging debt strategy in London.
Hungary had tested markets with a single auction in
February. Analysts and dealers have noted stabilisation in bond
markets with yields coming down from February highs as global
stocks recovered and the IMF pledged funds for emerging regions.
Hungarian yields have come down by about 200 basis points as
the debt agency has bought back hundreds of billion forints'
worth of bonds.
But whether the improvement can be maintained depends on
global sentiment and an end to capital outlfows, analysts said.
"I'm not entirely sure we are at the end of this process so
we might have some residual capital flows to go," Costa said.
"But alluring yields have to trigger some inflows back."
RETURN TO STABILITY?
Czech bonds were a tad down but dealers expected firming to
continue. The yield at a 10-year bond auction dipped on
Wednesday from the paper's inaugural sale last month as
expectations of a Czech eurobond issue ease pressure.
[]
Currencies have also stabilised this week after see-sawing
last week, and the forint <EURHUF=> was up 0.1 percent to bid at
296.7 to the euro by 1120 GMT while the Polish zloty <EURPLN=>
was slightly weaker at 4.406 per euro.
The Czech crown was 0.2 percent up at 26.835 versus the
common currency, while Romania's leu <EURRON=> was little
changed at 4.237.
Dealers said a rise in stocks lent support as regional
markets opened stronger on Thursday with Budapest's BUX <>
leading with a 1.5 percent rise.
"It is nothing but stock markets now, especially now that
results season is on the way," a Warsaw dealer said.
Central Europe's currencies dropped by up to a quarter after
the global financial turmoil escalated last autumn, but have
rebounded in the past two months, led by a 11.4 percent gain in
the zloty.
Poland's euro ambitions, a supporting factor in the past,
hit a bump on Wednesday when the statistics office said the
general government deficit exceeded the EU's 3 percent ceiling
last year.[]
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.832 26.885 +0.2% -0.29%
Polish zloty <EURPLN=> 4.407 4.403 -0.09% -6.63%
Hungarian forint <EURHUF=> 296.67 297.07 +0.13% -11.16%
Croatian kuna <EURHRK=> 7.407 7.38 -0.36% -0.57%
Romanian leu <EURRON=> 4.237 4.243 +0.14% -5.25%
Serbian dinar <EURRSD=> 94.206 93.607 -0.64% -5.02%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +1 basis points to 179bps over bmk*
4-yr T-bond CZ4YT=RR +17 basis points to +201bps over bmk*
8-yr T-bond CZ8YT=RR +3 basis points to +286bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -7 basis points to +403bps over bmk*
5-yr T-bond PL5YT=RR -5 basis points to +344bps over bmk*
10-yr T-bond PL10YT=RR -5 basis points to +293bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -27 basis points to +879bps over bmk*
5-yr T-bond HU5YT=RR -63 basis points to +825bps over bmk*
10-yr T-bond HU10YT=RR -51 basis points to +730bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1321 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/Dagmara Leszkowicz; editing by Toby Chopra)
