* Better global sentiment helps CEE currencies gain
* Forint rises despite concerns over public finances
(Adds bond yields, detail)
WARSAW, July 27 (Reuters) - Central European currencies
inched up on Tuesday against a backdrop of improving sentiment
for riskier assets after Monday's firm U.S. new home sales.
The Hungarian forint followed the regional trend shrugging
off concerns over the breakdown of talks with the International
Monetary Fund and over Budapest's budget consolidation strategy.
"The environment is supportive for Central East European
(currencies), with the zloty and the forint particularly
benefiting from the improvements," Unicredit analysts wrote in a
note to clients.
Analysts referred to better sentiment for riskier assets
sparked by the outcome of European banks' stress test results
released on Friday.
The Polish zloty <EURPLN=> has gained about 1 percent
against the common currency since Friday. At 0910 GMT the zloty
as well as the forint <EURHUF=> were up 0.3 percent compared
with Monday's close.
"Risk taking is back into the spotlight, with equity markets
benefiting, as investors shrugged off doubts about the EU stress
tests results and firm U.S. new home sales also sparked some
optimism," the Unicredit analysts said.
The Czech crown was up 0.1 percent against the euro at 0910
GMT and held near a 3-1/2 month high.
A surprising 23.6 percent jump in new U.S. home sales in
June from May countered some disappointing data in recent weeks
that had increased concerns the U.S. economy may slip back into
recession. []
In Central Europe, analysts and dealers said investors were
likely to continue focusing on external factors and the
International Monetary Fund's mission to Romania would probably
be the only exception to that rule.
In Romania, investors were on the lookout for any comments
from IMF officials, who are in Bucharest until Aug. 4 to review
Romania's 20 billion euros aid deal. The Romanian leu <EURRON=>
was little changed at 0910 GMT.
Dealers expect the review to go more smoothly than previous
reviews, when the IMF said future tranches would only be
disbursed if severe austerity measures were taken under strict
deadlines.
BONDS
Improved global sentiment drove yields in Hungarian bonds
9-15 basis points lower on Tuesday but market players played
down the significance of the move and said it was magnified by
low liquidity.
Polish bond prices rose but only slightly and dealers
remained sceptical about the possibility of further gains.
"Bonds gained because risk appetite grew," said Krzysztof
Izdebski, a fixed income trader at PKO BP bank.
Poland has recently seen a slew of higher-than-expected data
which cemented expectations for an interest rate hike later this
year.
Inflation in June accelerated to 2.3 percent while analysts
expected a drop from the 2.2 percent reported for May. June
industrial output and retail sales also rose and beat
expectations.
"Looking at the latest domestic data, the price growth
potential on the debt market is limited," Izdebski said.
-------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.09 25.122 +0.13% +4.89%
Polish zloty <EURPLN=> 4.011 4.024 +0.32% +2.32%
Hungarian forint <EURHUF=>284.85 285.8 +0.33% -5.09%
Croatian kuna <EURHRK=> 7.244 7.243 -0.01% +0.9%
Romanian leu <EURRON=> 4.246 4.246 0% -0.2%
Serbian dinar <EURRSD=> 105.727 105.78 +0.05% -9.31%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -1 basis points to 93bps over bmk*
7-yr T-bond CZ7YT=RR -4 basis points to +89bps over bmk*
10-yr T-bond CZ9YT=RR +4 basis points to +105bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -4 basis points to +387bps over bmk*
5-yr T-bond PL5YT=RR -4 basis points to +357bps over bmk*
10-yr T-bond PL10YT=RR -2 basis points to +305bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -14 basis points to +596bps over bmk*
5-yr T-bond HU5YT=RR -15 basis points to +552bps over bmk*
10-yr T-bond HU10YT=RR -9 basis points to +455bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1110 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
(Reporting by Reuters bureaux, writing Kuba Jaworowski,
Editing by David Brough and Andrew Heavens)
