* Forint weaker, cbank keeps rates on hold as forecast
* S&P revision of U.S. outlook weakens Hungary's bonds
* Polish wage data touch below forecast
* Worries over possible Greek debt restructuring weigh
(Adds S&P, updates prices)
By Dagmara Leszkowicz and Jana Mlcochova
WARSAW/PRAGUE, April 18 (Reuters) - Hungary's forint eased
on Monday, extending recent losses against the euro after the
central bank kept interest rates steady and an official warned
the government could miss its target for budget revenue.
Standard & Poor's, while affirming the 'AAA/A-1+' sovereign
credit rating on the United States, revised its outlook on the
long-term rating to negative from stable [], sending
Czech bond yields some 3 basis points lower, copying German
yields.
Hungarian bonds, on the other hand, took a battering
following the S&P statement, but later recovered some of the
losses. At 1344 GMT, yields stood at roughly 8-13 basis points
above Friday levels.
"Yields in Germany fell, so Czech yields also slipped a
little bit," said Komercni Banka interest rates trader Dalimil
Vyskovsky. He added that the move was because the Czechs were
seen as more of a safe-haven bet, while Hungary was not.
Hungary's central bank kept rates on hold at 6 percent, as
expected, and analysts said policymakers were likely to hold
fire for an extended period of time as risks on both sides
balance each other out.
Hungary's inflation surprised on the upside last week,
effectively ending near-term rate cut speculation, but the
strong forint and weak domestic demand still point to a possible
easing in the longer term.
"The fact that the bank wants rates on hold for a long time
is market positive I think," a dealer said in Budapest. "It's
also good that the fiscal side is improving in Hungary. The fate
of local assets will be set by the way the debt crisis plays out
in Europe and the U.S."
By 1426 GMT the forint <EURHUF=> traded at 268.16 per euro,
down by 0.63 percent.
Hungary's ruling party Fidesz pushed through parliament a
new constitution, despite a boycott from opposition parties
which say it lacks consensus and would cement the ruling party's
power beyond the end of its term. []
The country's Economy Ministry State Secretary Gyorgy
Naszvadi said Hungarian corporate and value-added tax revenues
may be lower than in government plans in 2011 but that its
deficit goal remained attainable []
East European currencies have been immune so far to the
latest bout of worries linked to negative news from
heavily-indebted euro zone periphery nations, but market
participants say a possible restructuring of Greece's debt could
affect the CEE region.
Fiscal policies across the region itself remain in focus,
especially in Poland, where growing doubts over a persistent
failure to adopt rigorous fiscal reforms may shift investor
interest to Hungary. []
POLISH WAGE BELOW FCAST
The Polish zloty <EURPLN=> fell by 1.1 percent to 3.992
versus the euro as the market digested March wage data. Wages
and employment in the corporate sector each rose a touch less
than analysts had forecast, reducing expectations for a May
interest rate hike. []
"From the Monetary Policy Council point of view, it seems
that the data backs the view to wait with an interest rate
increase until at least June," said Piotr Kalisz, chief
economist at Citibank Handlowy.
Markets have priced in a rate hike as early as May after
inflation in March unexpectedly spiked to 4.3 percent on an
annual basis, much above forecasts and the central bank's target
of 2.5 percent plus or minus 1 percentage point.
But Governor Marek Belka dampened some of the expectations,
saying the MPC should not base its decision on monthly data.
MPC member Adam Glapinski echoed this view in an interview
for Bloomberg on Monday, saying the bank would make a serious
mistake by raising borrowing costs in May. []
Elsewhere, Romania's leu <EURRON=> was virtually flat and
the Czech crown <EURCZK=> gained 0.28 percent.
Government party leaders in the Czech Republic were expected
to say late on Monday whether and how they would continue to
rule together after a corruption scandal brought the
centre-right administration to the brink of collapse.
Parties pledged on Friday to stick with their alliance but
they are still discussing what steps they will take to overcome
the lack of trust, potentially including a cabinet reshuffle and
additions to the coalition contract.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.148 24.24 +0.38% +3.53%
Polish zloty <EURPLN=> 3.989 3.949 -1% -0.78%
Hungarian forint <EURHUF=> 268.3 266.5 -0.67% +3.61%
Croatian kuna <EURHRK=> 7.34 7.329 -0.15% +0.54%
Romanian leu <EURRON=> 4.091 4.09 -0.02% +3.47%
Serbian dinar <EURRSD=> 101.41 101.33 -0.08% +4.45%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +12 basis points to -3bps over bmk*
7-yr T-bond CZ7YT=RR +8 basis points to +52bps over bmk*
10-yr T-bond CZ9YT=RR +6 basis points to +67bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR 0 basis points to +326bps over bmk*
5-yr T-bond PL5YT=RR +11 basis points to +320bps over bmk*
10-yr T-bond PL10YT=RR +9 basis points to +286bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +22 basis points to +468bps over bmk*
5-yr T-bond HU5YT=RR +20 basis points to +438bps over bmk*
10-yr T-bond HU10YT=RR +22 basis points to +395bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1639 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, Writing by Dagmara Leszkowicz
and Jana Mlcochova; Editing by Stephen Nisbet)
