* Poland expected to keep key rate unchanged at 3.5 pct
* Polish Nov. retail sales beat forecast, recovery seen
* Romania eyes confidence vote in new government
* Regional currencies edge up, bond yields flat
(Recasts with Polish data, bonds, updates market)
By Marton Dunai
BUDAPEST, Dec 23 (Reuters) - Emerging European currencies
edged up in thin trade on Wednesday as Polish retail sales beat
forecasts in November and the central bank was seen holding
rates unchanged later in the day.
Poles spent 6.3 percent more at stores in November than a
year ago, hinting that a recovery is under way and prompting
analysts to embolden GDP forecasts for the fourth quarter.
[]
By 1007 GMT, the zloty <EURPLN=> and the Hungarian forint
<EURHUF=> each added about a quarter of a percent versus the
euro. The Czech crown <EURCZK=>, the region's top performer in
2009, was flat.
The forint has firmed in illiquid trading this week after
the central bank cut rates by a smaller than expected 25 basis
points on Monday, to 6.25 percent.
Gains were helped by low liquidity as most investors have
closed positions ahead of the year-end.
"Activity is low," a Warsaw-based dealer said. "The zloty
keeps strong. Money sent to Poland for Christmas from abroad is
helping... I think the zloty will be in a range of 4.1650-4.1850
against the euro."
Czech market watchers also expect subdued trading and
current levels holding out after recent losses.
"We do not expect Tuesday losses to erase quickly and the
crown may remain defensive during the holidays," bank CSOB said
in a morning note.
The Czech central bank will release at 1330 GMT minutes from
the Dec. 16 interest rate setting meeting where policymakers
unexpectedly cut the main rate <CZCBIR=ECI> to a record low of 1
percent.
Still, currency moves in the rest of the year should be
attributed to low liquidity rather than local factors, a dealer
in Budapest said.
"It's pure liquidity trading right now. I doubt anything
will move markets today, be it the Polish rates or the Michigan
index," he said. "Me, I will probably close shop early. I'm yet
to see a client this morning."
POLAND RATES SEEN ON HOLD
Bond markets were also quiet regionwide and yields were
broadly unchanged everywhere.
Analysts expect the key interest rate in Poland to remain at
its all-time low of 3.5 percent in a decision due in the early
afternoon.
"The Monetary Policy Council's decision on rates, the last
one in this line-up, will not have any influence on the
euro-zloty," Bank BPH analysts wrote in their morning report.
"Foreign investors will probably keep an eye out for the
U.S. University of Michigan consumer confidence index and real
estate data." <ECON>
The Romanian leu <EURRON=> added 0.3 percent ahead of a
confidence vote in parliament for the cabinet proposed by Prime
Minister designate Emil Boc. The centrist coalition government
is seen winning the vote.
"(The market) doesn't expect the cabinet to fall," one
dealer said. "I expect the leu to edge up, in tandem with the
region."
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.336 26.349 +0.05% +1.58%
Polish zloty <EURPLN=> 4.169 4.18 +0.26% -1.3%
Hungarian forint <EURHUF=> 273.8 274.54 +0.27% -3.74%
Croatian kuna <EURHRK=> 7.285 7.279 -0.08% +1.1%
Romanian leu <EURRON=> 4.205 4.217 +0.29% -4.53%
Serbian dinar <EURRSD=> 96.41 96.27 -0.15% -7.19%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +1 basis points to +77bps over bmk*
7-yr T-bond CZ7YT=RR -1 basis points to +86bps over bmk*
10-yr T-bond CZ10YT=RR -2 basis points to +71bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +2 basis points to +392bps over bmk*
5-yr T-bond PL5YT=RR 0 basis points to +363bps over bmk*
10-yr T-bond PL10YT=RR -1 basis points to +299bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +1 basis points to +586bps over bmk*
5-yr T-bond HU5YT=RR 0 basis points to +530bps over bmk*
10-yr T-bond HU10YT=RR -2 basis points to +467bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1107 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
(Reporting by Marton Dunai, editing by Mike Peacock/Ruth
Pitchford)
