* Leu firms to 8-mth, forint to 8-wk highs vs euro
* Record demand at Polish bond tender, Czech auction weak
* Hungary to meet European, U.S. bond investors
(adds Hungary eurobond, quote, updates prices)
By Marton Dunai and Marius Zaharia
BUDAPEST/BUCHAREST, Jan 13 (Reuters) - The Romanian leu and
the Hungarian forint hit multi-month highs on Wednesday as
cautious optimism resumed after Tuesday's falls, but mixed
results at debt tenders showed the rally remained fragile.
Central European markets have rallied since the start of the
year on hopes of a strong recovery in some economies and rising
global appetite for risk. But high financing needs and the shaky
fundamentals of some make a case for differentiation.
A successful eurobond issue by Poland on Monday
[] contributed to the good sentiment, with Romania
on Tuesday also announcing plans to issue a 1 billion euro
eurobond [].
Hungary's debt agency AKK said it has commissioned Citigroup
and Deutsche Bank to arrange meetings with investors in Europe
and the United States [] -- something fund managers
said may lead to the issue of a bond, possibly in dollars.
But mixed Polish and Czech debt auctions []
showed sentiment was fragile and concerns over Greece's debt
burden reminded investors of the risks to a region where several
countries have been bailed out in the past 18 months.
At 1646 GMT, the Polish zloty <EURPLN=> was 0.3 percent
stronger on the day and the leu <EURRON=> was up 0.1 percent,
slightly off a fresh eight-month high against the euro. The
forint <EURHUF=> was 0.1 percent up after hitting a two-month
high earlier in the day, and the Czech crown <EURCZK=> was flat.
The leu has outperformed this month, after lagging in the
second half of 2009, mostly because investors expect Romania to
approve an austerity 2010 budget this week and unlock more of
its 20 billion euros of IMF-led aid after months of deadlock.
"The 4.1 level would be the first stop where we could see
some profit taking ... because of shaky risk appetite," one
dealer in Bucharest said.
"If risk stays on for another month, the leu could test
4.00, but beyond that there is a risk of seeing the central bank
on the (euro) buying side, to help exports. Fast firming doesn't
sit well with the central bank."
MIXED DEBT AUCTIONS
While the Czech Republic, together with Poland, is regarded
fundamentally sounder than other economies in the region, its
budget is under scrutiny ahead of elections later this year.
On Wednesday, an auction to sell 10-year bonds was met with
thin demand [], a weak signal to open a year in
which the Czechs face record high borrowing, and pushing long
term yields about four basis points higher.
In contrast, Poland's bond tender attracted the highest
demand on record for the two-year paper [] and
pushed yields lower by up to 5 basis points immediately.
"Poland had a successful tender of eurobonds recently which
has already lowered borrowing needs by 10 billion zlotys," said
Piotr Kalisz, chief economist at Citibank Handlowy.
"Additionally, the market widely expects the zloty to
appreciate, whereas the Czech crown is expected to depreciate
further or at least to weaken against the zloty."
Hungarian bonds dropped by up to 10 basis points. Some
analysts say 5-year Hungarian bonds may be among the most
attractive paper in the region, because of the high yield.
In the wider region, Serbia's central bank intervened in the
currency market on Wednesday, selling 23 million euros at a rate
of 97.25 per euro, but failed to stem a decline in the dinar
[].
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.173 26.172 0% +0.55%
Polish zloty <EURPLN=> 4.058 4.071 +0.32% +1.13%
Hungarian forint <EURHUF=> 267.31 267.55 +0.09% +1.14%
Croatian kuna <EURHRK=> 7.291 7.272 -0.26% +0.25%
Romanian leu <EURRON=> 4.123 4.125 +0.05% +2.77%
Serbian dinar <EURRSD=> 97.08 97.38 +0.31% -1.24%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +3 basis points to 70bps over bmk*
7-yr T-bond CZ7YT=RR -1 basis points to +106bps over bmk*
10-yr T-bond CZ10YT=RR +7 basis points to +104bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -4 basis points to +381bps over bmk*
5-yr T-bond PL5YT=RR -235 basis points to +325bps over
bmk*10-yr T-bond PL10YT=RR -1 basis points to +278bps over
bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -9 basis points to +531bps over bmk*
5-yr T-bond HU5YT=RR -239 basis points to +484bps over bmk*
10-yr T-bond HU10YT=RR -7 basis points to +418bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1846 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaux; Writing by Marton
Dunai/Sandor Peto and Marius Zaharia; Editing by Patrick Graham)
