* FX weaker, zloty down ahead of wages data
* Polish bond market calmed after Wednesday rise
* Hungary chooses Citi, ING for 5-yr eurobond issue
(Adds fixed income, detail)
By Dagmara Leszkowicz
WARSAW, July 16 (Reuters) - Poland's zloty was weaker on
Thursday, with investors booking profits from the recent rally
ahead of wages data that may offer clues over future interest
rate moves, seen as central to the currency's outlook.
Hungary sold 64 billion forints worth of debt on Thursday,
and all three bond auctions were oversubscribed, continuing a
recent trend of increased attractiveness for regional bonds.
[]
The auction was taken as a positive sign by the market, but
yields only narrowed 5 basis points at the long-end of the curve
as an immediate impact.
"The auctions surprised the market a bit, yields were
narrower than expected, but the fact that (debt agency) AKK
could sell more than originally offered is for sure a positive
sign," a fixed income dealer in Budapest said.
Meanwhile, the country's finance ministry said it has
mandated Citigroup and ING Bank to lead manage a five-year
eurobond issue likely this week. []
In Poland, the statistics office releases wages data at 1200
GMT while Hungary's data already showed wages in May grew by 2.5
percent year-on-year, failing to meet expectations and offering
an example of Hungary's economic headaches. []
"If the data in Poland are in line with consensus (around a
3 percent rise year-on-year) it will show inflationary pressures
disappeared and that could give a scope for further rate cuts,"
said Lutz Karpovitz, senior FX strategist at Commerzbank.
"But if its higher than expected it should give support for
the zloty," he added.
The Polish central bank's Monetary Policy Council (MPC) has
already lowered borrowing costs by a total of 250 basis points
since November to an all-time low of 3.50 pct and analysts
expect it may cut rates again after the summer.
At 0938 GMT the zloty <EURPLN=> was traded 0.6 percent down
to the euro, while Hungary's forint <EURHUF=>, the Czech crown
<EURCZK=> and Romania's leu <EURRON=> were 0.1-0.2 percent
weaker from Wednesday's domestic close.
The crown, the only major currency in the region to have
firmed against the euro this year, is less volatile than the
zloty and the forint and more resilient to changes in regional
trends, although it took some beating from poor data this week.
"The crown is a dragged a bit by the weak data, but this
will be soon forgotten and I think we are heading for the levels
around 25.500-25.600 (per euro)," a dealer in Prague said.
POLISH BONDS STEADY
The Polish bond market was stable on Thursday, after papers'
yields fell 3 basis points across the curve on Wednesday on the
successful 5-year bond auction. []
Earlier in the day one of the country's central bankers said
further rate cuts were unlikely. Marian Noga was quoted on
Thursday by a newspaper saying further easing would put pressure
on bonds. []
Analysts said Noga's comment did not affect bonds.
"Yields have not changed (on the comment). The zloty is
still crucial," said one Warsaw-based dealer.
Stocks in the region were mostly down on Thursday with
Budapest BUX <> leading losses, falling more than 1 percent.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.878 25.855 -0.09% +3.38%
Polish zloty <EURPLN=> 4.307 4.281 -0.6% -4.46%
Hungarian forint <EURHUF=> 274.12 273.47 -0.24% -3.86%
Croatian kuna <EURHRK=> 7.327 7.32 -0.1% +0.52%
Romanian leu <EURRON=> 4.223 4.214 -0.21% -4.94%
Serbian dinar <EURRSD=> 93.327 93.217 -0.12% -4.12%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR 0 basis points to 151bps over bmk*
4-yr T-bond CZ4YT=RR -1 basis points to +167bps over bmk*
8-yr T-bond CZ8YT=RR +10 basis points to +298bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR 0 basis points to +383bps over bmk*
5-yr T-bond PL5YT=RR -1 basis points to +307bps over bmk*
10-yr T-bond PL10YT=RR 0 basis points to +279bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +25 basis points to +733bps over bmk*
5-yr T-bond HU5YT=RR +19 basis points to +653bps over bmk*
10-yr T-bond HU10YT=RR +19 basis points to +541bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1238 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Dagmara
Leszkowicz; editing by Chris Pizzey)
