(Updates throughout)
By Jason Hovet
PRAGUE, Sept 19 (Reuters) - Emerging European currencies and
stock markets pushed higher on Friday, with Poland's zloty and
Hungary's forint leading the way, buoyed by U.S. plans to clean
up the toxic assets that have jammed global credit markets.
The zloty <EURPLN=> rose 1 percent to 3.305 to the euro by
1415 GMT, and the forint <EURHUF=> jumped 1.2 percent to 239.3
per euro.
High-yielding currencies benefitted from a rise in risk
appetite, and analysts expect U.S. plans to use $50 billion to
back money market mutual funds will further ease risk concerns,
supporting central European markets in the short-term.
"Volatility is still high," said Stuart Bennet, global
foreign exchange strategist at Calyon. "But on the whole (the
plan) looks as though it certainly is going to lead to a decline
in risk aversion."
Market watchers also said Warsaw's declaration of a drive
over the next three years to prepare to join the euro could help
it break away from regional peers if global turmoil subsides.
Regional stock markets jumped on Friday led by an 11.7
percent rise in Prague as global markets soared on the U.S. debt
plans and moves to ban short-selling financial stocks
[].
Other currencies followed the rally, including Romania's leu
<EURRON=> with a 0.9 percent rise to 3.63 to the euro, and the
lower-yielding Czech crown cut earlier losses but still lagged,
suffering from the pick-up in risk appetite.
The global credit crunch reached new levels this week,
starting with the bankruptcy protection filing of Lehman
Brothers and moving to a U.S. bailout of insurance giant AIG.
Emerging markets have swung widely, causing havoc in Russia,
where officials shut the bourse on Wednesday and Thursday after
steep falls before gains of more than 20 percent on Friday.
But central Europe, whose economies are still playing
catch-up and where lending habits remain conservative, has been
somewhat insulated from global credit concerns, although share
prices of the region's real estate firms have been punished.
The Czech, Hungarian, Polish and Romanian currencies have
fallen back in recent weeks due to slower economic growth in
Europe and scaled back expectations for higher interest rates.
But the zloty has surged since officials said it could
qualify for the euro in 2011 and likely join a year later.
Analysts say the central bank may hike rates to cut
inflation and brace the economy for a spell in the pre-euro
ERM-2 currency grid, which could begin by early 2009.
That has hit the short end of Poland's bond yield curve, to
the benefit of the long end, but weaker than expected industrial
output data on Thursday tamed some rate hike expectations.
On Friday, Polish bonds steadied, while in Hungary domestic
fund managers snapped up mainly longer-term bonds with yields
falling sharply.
"Foreigners are on the offer, cleaning their books... while
some domestic fund managers think: it's great, risk aversion is
over so we should buy Hungarian bonds," a Budapest trader said.
The Czech crown <EURCZK=> bucked the regional surge, falling
0.2 percent to 24.06 to the euro in illiquid trade.
"Investors are going back into riskier assets, and are
therefore cutting their positions in the Czech crown," said
Ulrich Leuchtmann, head of foreign exchange research at
Commerzbank in Frankfurt.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 24.062 24.019 -0.18% +9.19%
Polish zloty <EURPLN=> 3.305 3.337 +0.96% +8.21%
Hungarian forint <EURHUF=> 239.300 242.300 +1.24% +5.36%
Croatian kuna <EURHRK=> 7.109 7.102 -0.10% +2.97%
Romanian leu <EURRON=> 3.633 3.665 +0.87% -1.47%
Serbian dinar <EURRSD=> 76.630 76.287 -0.45% +2.7%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -27 basis points to -11bps over bmk*
5-yr T-bond CZ5YT=RR -25 basis points to -11bps over bmk*
10-yr T-bond CZ9YT=RR -5 basis points to +25bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -32 basis points to +234bps over bmk*
5-yr T-bond PL5YT=RR -25 basis points to +188bps over bmk*
10-yr T-bond PL10YT=RR -14 basis points to +163bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -34 basis points to +512bps over bmk*
5-yr T-bond HU5YT=RR -31 basis points to +478bps over bmk*
10-yr T-bond HU10YT=RR -40 basis points to +363bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1615 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet; Editing
by Ruth Pitchford)
