* FX gain as U.S. jobs data boost confidence, risk appetite
* Leu eases after govt shakeup signals uncertainty
* Bonds mixed, upcoming Czech eurobond issue eyed
* Hungary govt: no room for fiscal stimulus
(Recasts throughout)
By Marius Zaharia and Marton Dunai
BUCHAREST/BUDAPEST, Sept 3 (Reuters) - Emerging European
currencies got a boost on Friday from better than expected U.S.
payroll figures that were seen risk positive and may result in
further currency gains in the coming days, dealers said.
"The data was a double positive surprise with the headline
and the revisions to the previous months, and that, along with
stock gains of recent days, spells doom for shorters," a dealer
in Budapest said. "I see a good few days of gains ahead."
The Romanian leu bucked the trend and remained in negative
territory after hitting two-month lows as Bucharest reshuffled
its government and appointed a little-known official as finance
minister, increasing concerns about political stability.
Ruling party economist Gheorghe Ialomitianu is widely
expected to continue economic policies as agreed with the IMF
[] [].
But the reshuffle signalled increasing tensions within the
main ruling party and raised concerns about its ability to
resist a likely no-confidence vote against it later this year.
"The second half of the year should test Romania's political
resolve to implement austerity measures," Nomura analyst Peter
Attard Montalto said in a note to clients.
"Overall, we see politics as the key sovereign risk and
vulnerability to external shocks as the key factor driving
Romanian markets... Early elections are increasingly likely."
By 1339 GMT, the leu <EURRON=> had fallen 0.2 percent on the
day, trading at 4.278 per euro, off a two-month low of 4.288 hit
earlier in the session.
Capital Economics said the currency may drop as low as 4.40
per euro by the end of the year.
The Polish zloty <EURPLN=> led gains elsewhere in the
region, adding 0.9 percent, followed by 0.6 percent gains by the
Hungarian forint <EURHUF=>. The Czech crown <EURCZK=>, the
region's safe-haven currency, was up 0.2 percent.
A Reuters poll showed on Friday that emerging Europe's
currencies are expected to sail through an upcoming more
volatile period in international markets and resume
strengthening next year. The forint is seen gaining more than
its peers after underperforming recently. []
BONDS MIXED
Regional bond markets were mixed, with Hungary's bond yields
somewhat lower and Poland's a little higher than on Thursday.
Dealers said trading was extremely thin.
Poland's government is expected to discuss its 2011 budget
draft later on Friday. Investors will be eyeing borrowing needs
and the final deficit figure (seen at 40.2 billion zlotys).
Growth is seen by the government at about 3.5 percent this year.
"The risk of interest rate hikes are becoming more and more
realistic, pressuring prices. Bund prices also falling," said
one Warsaw-based fixed income dealer.
The Czech Finance Ministry named Deutsche Bank <DBKGn.DE>,
Barclays Capital <BARC.L> and Erste Group's <ERST.VI> Czech unit
Ceska Sporitelna to lead a Eurobond issue it said would take
place in the "near future".
Dealers said the issue could come as soon as next week and
expected a strong demand. The bond, which they said could be in
the volume of up to 2.0 billion euros, was likely to have long
maturity of 10-15 years.
Czech bond yields were mixed on Friday, hovering at record
lows.
Regional investors remained focused on the state of public
finances, particularly in Hungary.
Economy Minister Gyorgy Matolcsy said on Friday Hungary had
no room to bolster growth with more budget spending, but pointed
to monetary stimulus instead. He also reiterated Budapest did
not intend to sign a new deal with the IMF. []
"We remain of the view that Hungary is headed towards a very
tense negotiation period when it announces its budget plans
mid-October," BNP Paribas said in a note. "We continue to look
for opportunities to build long EURHUF on dips."
Romanian bonds were also virtually flat, with traders
expecting the new finance minister would not alter an existing
strategy to cap yields at debt auctions at 7 percent.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.655 24.707 +0.21% +6.75%
Polish zloty <EURPLN=> 3.933 3.968 +0.89% +4.35%
Hungarian forint <EURHUF=> 283.05 284.85 +0.64% -4.49%
Croatian kuna <EURHRK=> 7.284 7.289 +0.07% +0.35%
Romanian leu <EURRON=> 4.274 4.266 -0.19% -0.86%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +6 basis points to +93bps over bmk*
7-yr T-bond CZ7YT=RR -12 basis points to +91bps over bmk*
10-yr T-bond CZ9YT=RR -5 basis points to +85bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR 0 basis points to +411bps over bmk*
5-yr T-bond PL5YT=RR -1 basis points to +394bps over bmk*
10-yr T-bond PL10YT=RR +1 basis points to +323bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -8 basis points to +626bps over bmk*
5-yr T-bond HU5YT=RR -9 basis points to +585bps over bmk*
10-yr T-bond HU10YT=RR -16 basis points to +494bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1539 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 Patrick Graham, Susan Fenton and Toby Chopra)
