* Forint firms to 4-month high to euro ahead of weekend vote
* Other forex rates, stocks in C. Europe mixed
* Romania holds rates, Polish rate decision eyed
(Adds comments, fresh prices)
BUDAPEST, Sept 29 (Reuters) - Central European assets were
mixed on Wednesday as Romania's central bank kept interest rates
on hold, while Hungarian assets extended gains ahead of key
local municipality elections at the weekend.
Poland's central bank is also expected to keep its rates on
hold later on Wednesday.
The leu <EURRON=> was weaker against the euro after the rate
decision, which had been expected, and was bid at 4.272 at 1004
GMT, down 0.2 percent from Tuesday. []
Romania has the region's most fragile government, which is
struggling to implement tough policies to keep an international
bailout on track as popular resistance to austerity measures is
growing in Europe. []
Hungary's forint <EURHUF=> was bid at 275.80 to the euro,
slightly off a 4-month high hit earlier in the day at 275.35.
Hungarian government bond yields fell 10 basis points, with
5-year yields at 6.55 percent, a near 5-month low.
"The forint leads and the elections are a factor, while in
Poland there will be (a) central bank (rate decision)," one
Budapest-based dealer said. "Also some kind of a decision may
come out from Brussels about the accounting of pension reform in
budgets, which may be positive," the dealer added.
Hungary's government is expected to publish the details of
its 2011 budget -- key to investor confidence in Hungarian
assets -- after the weekend vote in which the ruling party is
expected to strengthen its political support.
Dealers said the dollar's slide against the euro <EUR=>
could support risk appetite and currencies in the European
Union's emerging markets, but investors were eyeing the rate
decision in Poland.
Rate decisions in the region are likely to stir markets less
than comments by officials on the reasoning behind them, with
core market news still most likely to set the direction of
trading, dealers said.
"The prospect of new quantitative easing in the U.S. stays
in the picture," one bond trader in Budapest said, adding that
fresh money in global markets would further fuel risk appetite.
"With money on the table, the violinist begins to play, and
no one cares about bad domestic news, we just drink and sing."
RATES SEEN ON HOLD
The Polish zloty <EURPLN=> was flat at 3.971 against the
euro, giving up morning gains, while the Czech crown <EURCZK=>
eased 0.1 percent to 24.596.
In Poland, all but one of 28 analysts polled by Reuters
expect the central bank to leave rates unchanged at a record low
of 3.5 percent for the 15th month running. Higher rates are
expected by the end of the year due to price pressures, though a
series of weaker data and comments by the bank have cooled such
expectations.
With a hold priced in, the market focus will be on the
council's post-decision comments on the zloty, growth prospects
and fiscal policy issues. []
"Many market participants expect the Polish central bank to
deliver its first rate hike soon," Danske Bank said in a morning
note. "We do not believe it will do so until Q1 next year at the
very earliest, given the continued benign inflation outlook."
"Arguments for leaving the rate unchanged are balanced,"
Goldman Sachs analysts wrote. "There is some risk of domestic
inflationary pressure... (but) rate hikes could result in PLN
appreciation and some loss of competitiveness."
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.596 24.564 -0.13% +7%
Polish zloty <EURPLN=> 3.971 3.97 -0.03% +3.35%
Hungarian forint <EURHUF=> 275.8 276.67 +0.32% -1.98%
Croatian kuna <EURHRK=> 7.295 7.292 -0.04% +0.19%
Romanian leu <EURRON=> 4.272 4.265 -0.16% -0.81%
Serbian dinar <EURRSD=> 106.01 105.62 -0.37% -9.56%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR 0 basis points to 81bps over bmk*
7-yr T-bond CZ7YT=RR -6 basis points to +96bps over bmk*
10-yr T-bond CZ9YT=RR -6 basis points to +101bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -2 basis points to +397bps over bmk*
5-yr T-bond PL5YT=RR -6 basis points to +362bps over bmk*
10-yr T-bond PL10YT=RR -4 basis points to +323bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -14 basis points to +549bps over bmk*
5-yr T-bond HU5YT=RR -14 basis points to +510bps over bmk*
10-yr T-bond HU10YT=RR -10 basis points to +449bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1209 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 bureaux, writing by Marton Dunai/Sandor
Peto; editing by Tim Pearce)
