* Better global sentiment helps CEE currencies gain
* Zloty breaks 4.0 psychological level, could gain further
* Forint leads gains despite concerns over public finances
(Adds technical details on zloty, Hungary tender)
By Kuba Jaworowski and Marius Zaharia
WARSAW/BUCHAREST, July 27 (Reuters) - Hungary's forint led
gains in central Europe on Tuesday as a smooth debt tender eased
some of the fears over its finances, while higher risk appetite
pushed the Polish zloty beyond the key 4.0 per euro level.
The forint, under pressure since the suspension of talks
with international lenders earlier this month, took advantage of
firm U.S. data and strong results of banks in Europe and
regrouped with the regional trend.
It gained more than its peers as a successful debt tender
gave more courage to investors to buy Hungarian assets.
Hungary raised its 3-month discount Treasury bill offer by 5
billion forints on Tuesday and sold 50 billion forints worth of
paper, with the average yield slipping 1 basis point from the
last tender. []
"We broke through one barrier at (EUR/HUF) 285, which was a
pretty tough one, and now we're near the next key level at
283.50," one dealer in Budapest said. "Part of it was the
successful T-bill auction, which boosted demand, but I expect
that to backfire at the bond auction on Thursday."
At 1339 GMT, the forint <EURHUF=> traded at 283.57 per euro,
up 0.8 percent on the day. The Polish zloty <EURPLN=> has gained
about 0.6 percent to reach 3.999 per euro in high turnover,
boosted mainly by interest from hedge funds.
It broke the psychological 4.0 per euro level for the first
time since May 18. The zloty's rise on Monday was technically
medium-term bullish because it triggered a major symmetrical
triangle formed by the highs and lows dating back to early May.
The triangle targets the zloty's April peak of 3.82 in
coming weeks or months, with initial resistance at 3.98, the
61.8 percent retracement of the zloty's drop from the April
peak.
The Czech crown <EURCZK=> was up 0.1 percent against the
euro and held near a 3-1/2 month high.
EYES ON ROMANIA
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.
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 on the day.
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.
"The leu firmed every time the IMF came in town," one dealer
in Bucharest said. "But if they increase the budget deficit
target again the market would react negatively.
"It means the IMF is open to compromises and ... the
government would think that what they have done so far was
enough and would not take the needed measures going forward."
Improved global sentiment drove yields in Hungarian bonds
14-17 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.
Poland has recently seen a slew of forecast-beating data which
cemented expectations for an interest rate hike later this year.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.065 25.122 +0.23% +5%
Polish zloty <EURPLN=> 3.999 4.024 +0.63% +2.63%
Hungarian forint <EURHUF=> 283.57 285.8 +0.79% -4.66%
Croatian kuna <EURHRK=> 7.243 7.243 0% +0.91%
Romanian leu <EURRON=> 4.249 4.246 -0.07% -0.27%
Serbian dinar <EURRSD=> 106.21 105.78 -0.4% -9.73%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +1 basis points to 95bps over bmk*
7-yr T-bond CZ7YT=RR -5 basis points to +88bps over bmk*
10-yr T-bond CZ9YT=RR 0 basis points to +101bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -10 basis points to +380bps over bmk*
5-yr T-bond PL5YT=RR -4 basis points to +355bps over bmk*
10-yr T-bond PL10YT=RR -3 basis points to +303bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -22 basis points to +588bps over bmk*
5-yr T-bond HU5YT=RR -19 basis points to +548bps over bmk*
10-yr T-bond HU10YT=RR -16 basis points to +448bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1439 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 Marius Zaharia,
Editing by David Brough)
