* Forint leads fx rebound, but Hungary bond yields rise
* Polish bonds give up some ground
(Adds bonds, new prices)
By Gergely Szakacs and Sandor Peto
BUDAPEST, Aug 26 (Reuters) - Hungary's forint led a rebound
in central European currencies on Thursday, helped by a firmer
euro, but yields at a Hungarian bond auction rose on concern
about Budapest ruling out a new agreement with the IMF.
Hungary sold 50 billion forints worth of three-, five- and
10-year bonds at auctions on Thursday, but a rise in yields and
lower demand indicated that confusing signals from Budapest in
the past few days about new talks with the IMF had hurt
sentiment on Hungarian assets. []
The forint <EURHUF=>, the region's worst-performing currency
behind the Serbian dinar <EURRSD=> this year, was bid at 282.90
against the euro at 1006 GMT, firming by half a percent from
Wednesday.
Central European currencies were helped by a recovery in the
euro, the region's reference currency, versus both the dollar
<EUR=> and the volatile Swiss franc <EURCHF=>, dealers said.
The Polish zloty <EURPLN=> added 0.3 percent to 3.984
against the euro and was also supported by gains in equities as
stock markets across central Europe rose by between 0.5 percent
and 1.4 percent.
"The first support is at 3.98 zlotys per euro and 4.0150 is
the level which will keep a lid on the trading from the other
side," Marcin Bilbin, a FX trader bank Pekao SA, said.
The Czech crown <EURCZK=>, central Europe's top performer so
far in 2010, added 0.1 percent after a central bank policy maker
was quoted as saying the period of low rates was over.
[]
HUNGARIAN YIELDS RISE
Hungarian government bonds in the secondary market traded at
the average yield levels set at the auctions, which were up
about 10 basis points from Wednesday. Three-year bonds traded at
6.88 percent, up 12 basis points.
Sentiment was dented by confusing comments from the
government in the past two days about new talks with the
International Monetary Fund in the autumn.
Budapest has said the talks would not lead to a new aid
deal, raising market concerns about the country's ability to
finance itself solely from the market from 2011.
Economists are now split down the middle over whether
Hungary -- which wants wiggle room in the 2011 budget for tax
cuts -- will at some point return to the IMF for aid.
[]
Hungary's central bank has also unnerved the market by
projecting higher inflation and slower economic growth in its
quarterly inflation report on Monday. It also said the
government needed to take measures to meet budget deficit
targets.
"The central bank's comments on Monday (about gloomier
domestic economic prospects) and the IMF stories leave bond
yields higher by about 45 basis points (in the past week) and
the forint weaker by about 5 forints (per euro)," one fixed
income trader said.
Elsewhere, the Czech Finance Ministry denied market talk
that it would lower its 2010 gross borrowing target.
[] Prague sold 52-week Treasury bills at an average
yield of 1.3 percent, down from 1.34 percent in the last primary
sale on July 15.
Polish bond yields fell slightly from late Wednesday's
levels, erasing a brief early spike on a technical move after
yields had fallen about 40 basis points across the curve since
the beginning of August, dealers said.
Additional supply of five- and 10-year papers from the
Finance Ministry on Wednesday also weighed on the market,
dealers said. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.875 24.91 +0.14% +5.8%
Polish zloty <EURPLN=> 3.984 3.996 +0.3% +3.01%
Hungarian forint <EURHUF=> 282.9 284.25 +0.48% -4.44%
Croatian kuna <EURHRK=> 7.28 7.274 -0.08% +0.4%
Romanian leu <EURRON=> 4.243 4.242 -0.02% -0.13%
Serbian dinar <EURRSD=> 105.5 105.18 -0.3% -9.12%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +8 basis points to 101bps over bmk*
7-yr T-bond CZ7YT=RR +1 basis points to +116bps over bmk*
10-yr T-bond CZ9YT=RR -2 basis points to +102bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -3 basis points to +395bps over bmk*
5-yr T-bond PL5YT=RR -1 basis points to +383bps over bmk*
10-yr T-bond PL10YT=RR -1 basis points to +322bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +13 basis points to +612bps over bmk*
5-yr T-bond HU5YT=RR +9 basis points to +576bps over bmk*
10-yr T-bond HU10YT=RR +7 basis points to +489bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1206 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 []
Spot FX rates
Eastern Europe spot FX <EEFX=> Middle East spot FX <MEFX=>
Asia spot FX <ASIAFX=> Latin America spot FX <LATAMFX=>
Other news and reports
World central bank news [] Economic Data Guide <ECONGUIDE>
Official rates [] Emerging Diary []
Top events [] Diaries [] Diaries Index []
(Reporting by Reuters bureaus, Writing by Gergely
Szakacs/Sandor Peto; Editing by Toby Chopra)
