(Adds details, fixed income, byline)
By Jason Hovet
PRAGUE, Nov 27 (Reuters) - Central Europe's currencies edged
up on Thursday, finding support from rises on equity markets,
but dealers said trade was quiet as U.S. markets will be shut
for a holiday and investors remained cautious.
The Polish zloty <EURPLN=> added 0.3 percent to 3.76 per
euro and the Hungarian forint <EURHUF=> inched up to 260.77.
Romania's leu <EURRON=> added 0.3 percent to 3.84, while the
Czech crown <EURCZK=>, after a strong rise late Wednesday, lost
0.9 percent to 25.17 against the euro by 0949 GMT, but still
traded near three-week highs hit this week.
Central European currencies have got a bounce from gains
this week in stock markets that cheered a rescue of banking
giant Citigroup and new stimulus plans in global economies.
On Thursday, central European bourses rose 2-3 percent,
following western peers up.
"The outlook for the rest of the week remains moderately
positive for the zloty with equity markets likely to be the
driver for trading," analysts at KBC said in a morning note.
However, trading was thin with a U.S. holiday and nerves
rattled after hundreds of people, including foreigners, were
trapped by Islamist gunmen in Mumbai on Thursday, after attacks
killed at least 101 people, dealers said.
Poor economic data in central Europe have also made
investors adjust to a new wave of interest rate cuts in the
region, with policy easing coming earlier than expected this
week in Hungary and Poland.
TREND CHANGE
Most central banks in the region have now moved to easing
cycles to help economies hurt by fading euro zone demand.
"The market has slightly changed... I think we will see more
cuts in the region," a Prague currency dealer said.
The Polish central bank's decision on Wednesday to cut
interest rates signalled a shift in policy and indicates further
reductions are likely, members of the bank's Monetary Policy
Council said on Thursday [].
Polish bonds opened little changed and dealers said
policymakers' comments have brought more clarity to investors
regarding possible next rate cuts, while Hungarian and Czech
debt markets were also little changed.
"Wednesday's cut was already priced in by investors," said
Pawel Bialczynski, dealer at BRE bank in Warsaw.
"The market is pricing a cut by a total of 200 bps next
year, but today's comments... calmed investors as they keep
saying the uncertainty on the market is huge," he added.
In other trade, Serbia's dinar <EURRSD=> slipped 1.2 percent
to 89.3 per euro, near all-time lows as a string of central bank
interventions this week failed to relieve the currency.
The dinar has been the region's worst performer with a 16.1
percent loss since Oct. 1, despite the central bank spending
around a half billion dollars in that time.
In Croatia, the kuna <EURHRK=> was a touch down, and some
analysts said they expected the central bank to intervene by
buying euros to boost kuna liquidity.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 25.17 24.932 -0.95% +5.01%
Polish zloty <EURPLN=> 3.754 3.767 +0.35% -4.26%
Hungarian forint <EURHUF=> 260.77 260.85 +0.03% -3.13%
Croatian kuna <EURHRK=> 7.145 7.14 -0.07% +2.48%
Romanian leu <EURRON=> 3.84 3.851 +0.29% -7.26%
Serbian dinar <EURRSD=> 89.326 88.287 -1.18% -13.42%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -3 basis points to 163bps over bmk*
5-yr T-bond CZ5YT=RR -19 basis points to +140bps over bmk*
10-yr T-bond CZ9YT=RR +5 basis points to +125bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +2 basis points to +381bps over bmk*
5-yr T-bond PL5YT=RR 0 basis points to +326bps over bmk*
10-yr T-bond PL10YT=RR +3 basis points to +273bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -3 basis points to +960bps over bmk*
5-yr T-bond HU5YT=RR -5 basis points to +891bps over bmk*
10-yr T-bond HU10YT=RR -2 basis points to +590bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1049 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 Toby Chopra)
