* Currencies firm on easing signals from U.S. Fed
* Polish finance minister's comments curb gains on zloty
* Romanian unions to protest against austerity measures
(Adds fresh quote, fixed income)
By Dagmara Leszkowicz
WARSAW, Sept 22 (Reuters) - Hungary's forint led gains in
emerging European assets on Wednesday after a top government
official signalled it would cut its budget deficit sharply next
year and helped by the euro's surge against the dollar.
Poland's zloty was also higher, though its gains were
limited by a surprisingly high forecast of this year's public
sector deficit from the finance minister.
Markets were dominated, though, by broader global moves
after the Federal Reserve raised expectations it would print
more dollars to help the U.S. economy at a policy meeting on
Tuesday []
That encouraged investors to buy riskier assets.
"The rally on eurodollar lifted the region's units, although
moves were not as sharp as on the euro," said one Warsaw-based
dealer. "But the finance minister's comments hurt sentiment on
the zloty slightly."
Finance Minister Jacek Rostowski told a radio interview the
deficit could be above 100 billion zlotys this year, much higher
than previous estimates despite an improving economy. Analysts
said the figure amounted to rather more than 7 percent of gross
domestic product. []
Warsaw had previously estimated that the deficit, which
includes local government and state agencies' shortfalls, would
amount to 6.9 percent of GDP.
In Hungary, Economy Ministry State Secretary Andras Karman
told the daily Magyar Nemzet the 2011 budget deficit would be
around 2.8 percent of GDP. Markets have been unnerved by the
government's seesawing on whether it would meet a 3-percent
target next year, part of efforts to stabilise its public
finances after it walked away from talks over IMF support.
By 0846 GMT Hungary's forint <EURHUF=> was 0.4 percent
stronger and the Czech crown <EURCZK=> was up a touch versus the
common currency but was at its 5-month high against the dollar.
The Polish zloty <EURPLN=> was 0.3 percent stronger against
the euro and rose to a 20-week high against the dollar at
2.9638.
Regional stocks were all in the red on Wednesday, falling
some 0.5-0.7 percent.
PROTESTS,POLITICS
The Romanian leu <EURRON=> was 0.1 percent stronger against
the euro, though political risks have clouded the outlook for
the currency after the powerful opposition said this week it
would file a no-confidence vote against the government next
month.
Some 22,000 protesters were expected to attend a labour
union rally in Bucharest on Wednesday against the centrist
coalition government's austerity measures.
The measures, which include tax hikes and wage cuts, are a
key factor in securing Romania's IMF-led 20 billion euro aid
package but have battered the government's popularity.
On the bonds front, Polish papers were a touch stronger,
following German bunds.
Later on Wednesday Poland will offer WZ0121 bonds maturing
in 2021 and WS0429 bonds maturing in 2029 in an exchange for
papers due in 2010 at a switch tender.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.64 24.644 +0.02% +6.81%
Polish zloty <EURPLN=> 3.94 3.953 +0.33% +4.16%
Hungarian forint <EURHUF=> 278.76 279.92 +0.42% -3.02%
Croatian kuna <EURHRK=> 7.283 7.284 +0.01% +0.36%
Romanian leu <EURRON=> 4.254 4.257 +0.07% -0.39%
Serbian dinar <EURRSD=> 105.23 105 -0.22% -8.89%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +3 basis points to 113bps over bmk*
7-yr T-bond CZ7YT=RR +1 basis points to +90bps over bmk*
10-yr T-bond CZ9YT=RR +6 basis points to +101bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +4 basis points to +390bps over bmk*
5-yr T-bond PL5YT=RR -1 basis points to +368bps over bmk*
10-yr T-bond PL10YT=RR +8 basis points to +311bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1046 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;
Editing by Susan Fenton)
