* Romania parlt approves centrist govt, leu leads gains
* Poland keeps key rate unchanged at 3.5 pct, as expected
* Polish Nov. retail sales beat forecast, recovery seen
(Recasts with Romania vote)
By Marton Dunai and Marius Zaharia
BUDAPEST/BUCHAREST, Dec 23 (Reuters) - The Romanian leu led
gains in emerging Europe on Wednesday as the parliament approved
a centrist government, while the zloty firmed in thin trade as
the Polish central bank held fire on interest rates as expected.
Romania's vote ends three months of political deadlock and
sets the stage for the centrist coalition to take painful
austerity measures, key to jump-start a frozen deal with the
International Monetary Fund, vital for the country's finances.
[]
"This is very good news, that should improve perception
towards Romania as it seems that the government is very
committed to observe the IMF accord," said Ionut Dumitru, head
of research at Raiffeisen Bank in Bucharest.
However, the government's wafer-thin majority in parliament
means it may struggle to implement needed reforms and markets
will wait for further steps to be taken before jumping to invest
in Romanian assets.
At 1353 GMT, the leu <EURRON=> was 0.5 percent stronger on
the day, the zloty <EURPLN=> and the Hungarian forint <EURHUF=>
were 0.3-0.4 percent up, while the Czech crown <EURCZK=> was 0.2
percent weaker in thin trade.
In Poland, the central bank kept its key rate unchanged at a
record low of 3.5 percent as expected [] and is
seen holding fire for most of 2010.
"The (Monetary Policy) Council may be concerned about the
negative influence of rate rises on the rate of growth, so rates
may remain unchanged throughout the whole of next year," said
Marcin Mrowiec, chief economist at Pekao Bank.
Signalling a steadying recovery, Poles spent 6.3 percent
more at stores in November than a year ago, prompting analysts
to strengthen fourth-quarter GDP forecasts. []
In Czech Republic, the central bank released minutes from
the Dec. 16 meeting at which policymakers unexpectedly cut the
main rate to a record low of 1 percent [], but
details failed to move markets, dominated by thin pre-holiday
trade.
Bond markets were also quiet regionwide and yields were
marginally lower everywhere, dealers said.
TOUGH 2010
Central Europe was one of the worst hit regions this year,
prompting governments to seek bailouts from the IMF to moderate
the impact of a recession that sent unemployment rates and
budget deficits through the roof.
But despite massive liquidity injections by the world's
biggest economies, the region may face difficulties in luring
investors next year as well, as growth-limiting measures will
need to be implemented to address large fiscal imbalances.
Moreover, elections in countries like Hungary, Poland, Czech
Republic, Ukraine, Latvia and Slovakia could endanger IMF deals
and make investors nervous.
Best positioned in terms of political risk seems to be
Romania, the country worst hit by political crisis in a region
where Hungarian and Czech governments also collapsed under
pressure from a painful recession this year.
"The fact that the next election is quite far away is
clearly positive, especially since other countries in the region
have elections in 2010," said Nicolaie Alexandru-Chidesciuc,
chief economist at ING Bank in Bucharest.
"Romania could benefit significantly from this, because it
could be perceived as more stable."
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.411 26.349 -0.23% +1.29%
Polish zloty <EURPLN=> 4.167 4.18 +0.31% -1.25%
Hungarian forint <EURHUF=> 273.5 274.54 +0.38% -3.64%
Croatian kuna <EURHRK=> 7.294 7.279 -0.21% +0.97%
Romanian leu <EURRON=> 4.195 4.217 +0.52% -4.31%
Serbian dinar <EURRSD=> 96.3 96.27 -0.03% -7.08%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR 0 basis points to +76bps over bmk*
7-yr T-bond CZ7YT=RR -2 basis points to +85bps over bmk*
10-yr T-bond CZ10YT=RR 0 basis points to +73bps 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 -3 basis points to +360bps over bmk*
10-yr T-bond PL10YT=RR -2 basis points to +299bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR 0 basis points to +585bps over bmk*
5-yr T-bond HU5YT=RR -3 basis points to +527bps 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 1553 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Marton Dunai and Marius Zaharia, editing by
Stephen Nisbet)
