* FX broadly flat before G20; crown, forint recoup losses
* Leu off recent lows but politics keep pressure on
* Czech yields dip after 5-session rise, Hungary yields up
(Writes through, updates markets, adds quotes)
By Jason Hovet and Marton Dunai
PRAGUE/BUDAPEST, Oct 22 (Reuters) - Emerging European
currencies recovered from early losses triggered by profit
taking on Friday, with most units trading flat on the day after
the dollar found its footing against the euro, dealers said.
The Czech crown <EURCZK=> had hit a five-week low against
the euro but clawed its way back towards the 24.50 level where
it has hovered for the better part of three weeks. Hungary's
forint <EURHUF=> also traded near the week's highs.
Both units were little changed on the day, as was the Polish
zloty <EURPLN=>. The Romanian leu <EURRON=> recovered from a
15-week low to add 0.7 percent but trading was thin, with mild
commercial demand that triggered stop losses to boost the unit.
Investors were also wary that a G20 finance ministers'
meeting in South Korea could strike a deal that might affect the
euro, the region's benchmark currency.
Shares in Budapest <> lost 1.8 percent by 1342 GMT on
some profit-taking after hitting a five-month peak during the
week, but the moves did not much affect the forint.
"The Economy Minister told us what he expects for next year,
but only the market will tell what actually happens next year,"
a dealer said. "It's quiet now, we're moving sideways."
Economy Minister Gyorgy Matolcsy said Hungary's government
will cut public spending by one percent of GDP next year,
including a freeze in nominal wages, to trim the budget deficit
below 3 percent of GDP. []
The crown has been the biggest gainer among central European
currencies this year, backed by a growing economic recovery and
government pledges to rein in the budget. It has not traded
above the 25 level since July.
A rise in a business sentiment survey in Germany, Central
Europe's main trading partner, also failed to lift currencies.
Klaus Abberger, an economist with the Ifo research institute
that runs the survey, said currency tensions are threatening the
world economy and an unpleasantly quick appreciation of the euro
<EUR=> is problematic for German companies. []
Emerging Europe policymakers have generally viewed currency
appreciation in the past year as positive. []
INTEREST RATES EYED
Interest rate decisions of the Hungarian and Polish central
banks could influence the market next week, one Budapest-based
dealer said. Neither bank is expected to change rates.
Hungarian government bonds regained some of the day's losses
to trade close to yield levels set at Thursday's auctions. The
bonds, which gave up part of September's gains in the past
weeks, could move in tight ranges, the dealer said.
"I expect a slow decline in yields after the 40-45 basis
point rise in yields in the past weeks," he said. "(Budget)
concerns have died down, there is no rate hike expectation, and
I don't see the curve steepening any further."
Romania's assets should remain under pressure as uncertainty
over the government's IMF-backed austerity drive persists,
analysts said.
The fragile coalition government is likely to survive a
no-confidence vote in Bucharest next week, but a slim majority
could mean it struggles to stick to austerity plans.
An IMF mission is in Bucharest to review Romania's progress
in meeting the conditions of its 20 billion euro aid package.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.573 24.593 +0.08% +7.1%
Polish zloty <EURPLN=> 3.966 3.969 +0.08% +3.48%
Hungarian forint <EURHUF=> 274.66 274.7 +0.01% -1.57%
Croatian kuna <EURHRK=> 7.336 7.337 +0.01% -0.37%
Romanian leu <EURRON=> 4.296 4.324 +0.65% -1.36%
Serbian dinar <EURRSD=> 106.25 106.27 +0.02% -9.76%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +2 basis points to +62bps over bmk*
7-yr T-bond CZ7YT=RR +5 basis points to +78bps over bmk*
10-yr T-bond CZ9YT=RR +6 basis points to +91bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +2 basis points to +371bps over bmk*
5-yr T-bond PL5YT=RR 0 basis points to +351bps over bmk*
10-yr T-bond PL10YT=RR +4 basis points to +313bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +12 basis points to +544bps over bmk*
5-yr T-bond HU5YT=RR +1 basis points to +513bps over bmk*
10-yr T-bond HU10YT=RR +8 basis points to +459bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1610 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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emerging market news []
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(Reporting by Reuters bureaus, writing by Jason Hovet and
Marton Dunai; Editing by Catherine Evans)
