* Hungary stocks at 2-yr high, Czech/Poland at 18-mth highs
* Dollar rise pulls down forint, zloty, but crown firms
* Bond yield spreads over Bunds drop though Greece weighs
(Adds new prices, comments)
By Marius Zaharia and Sandor Peto
BUCHAREST/BUDAPEST, April 6 (Reuters) - Central Europe's
equity markets hit their highest levels on Wednesday since the
region was hit by the global financial crisis in 2008 amid
renewed optimism over the global economy.
Currencies and government bonds, however, remained mixed in
thin trade as new concerns about Greece's debt crisis dented the
region's reference currency, the euro.
Poland's zloty <EURPLN=>, which traded near a 16-month peak
early in the session, retreated later and was flat at 3.841
against the euro at 1401 GMT.
"The region is generally weaker today, slightly down because
of Greece. There aren't many moves today, there is slight
profit-taking and that's it," said Maciej Slomka, chief fixed
income dealer at Peka Bank.
Hungary's forint <EURHUF=> eased by 0.2 percent to 265.52,
Romania's leu <EURRON=> was steady at 4.091, while the Czech
crown <EURCZK=> firmed half a percent to 25.228.
"That was mainly the dollar's firming against the euro," one
Budapest-based dealer said. "If it's a factor like now it
usually moves the zloty and the forint which are the main carry
currencies in the region ... the crown is different, it does not
always track them, like now."
Hungary will hold parliamentary elections on Sunday and on
April 25. Dealers said a likely landslide victory of the main
opposition party Fidesz was priced in and the news flow ahead of
the election was unlikely to move Hungarian assets.
A poll showed on Tuesday that Fidesz has widened its lead
over the ruling Socialists []. Investors are likely
to be cautious until the new government announces its first
reform measures after campaigning on new jobs and tax cuts.
"Only major core market shocks can move the forint out of
its current range," a dealer in Budapest said. "Otherwise, we'll
wait until after the elections."
GREECE STILL A CONCERN
Renewed optimism about global recovery following stronger
U.S. data buoyed stocks in emerging markets. Budapest's main
<> index rose to two-year highs, while the Czech <> and
Polish <> stock markets hit one-and-a-half year highs.
Markets are gearing up for trade and industry data in
Romania, Hungary and the Czech Republic this week, looking for
signs about the pace of recovery which may also provide clues
about future central bank interest rate moves in the region.
The global mood improved over the Easter holiday as data on
Monday showed the U.S. services sector grew at its fastest pace
in nearly four years, adding to optimism sparked by Friday's
payrolls report [].
But Greece's struggle to tackle its debt problem continues
to put a brake on currencies in the European Union's emerging
markets. Worries over Greece resurfaced after a report quoted
senior government sources saying Athens wants to amend a deal
struck at an EU summit last month. Greece denied the report.
[]
The spreads of Central European government bond yields over
Bunds dropped by around five basis points across the region as
euro zone bond yields rose in the wake of the initial report on
Greece which was later denied.
The region's debt picture is better than that of Greece and
several other euro zone countries.
Polish bond yields, however, rose by a few basis points,
while Hungarian yields were mixed after a two-month rally in
bond prices, which has brought yields down to multi-year lows.
Hungary's central bank is expected to cut its base rate
further from 5.5 percent later this year despite some question
marks over the new government's fiscal policy after the April
elections. <HUREPO1>
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.228 25.36 +0.52% +4.32%
Polish zloty <EURPLN=> 3.841 3.843 +0.05% +6.85%
Hungarian forint <EURHUF=> 265.52 265.02 -0.19% +1.82%
Croatian kuna <EURHRK=> 7.269 7.27 +0.01% +0.55%
Romanian leu <EURRON=> 4.091 4.092 +0.02% +3.58%
Serbian dinar <EURRSD=> 99.46 99.43 -0.03% -3.6%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -6 basis points to 67bps over bmk*
7-yr T-bond CZ7YT=RR -5 basis points to +87bps over bmk*
10-yr T-bond CZ10YT=RR -9 basis points to +82bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +1 basis points to +355bps over bmk*
5-yr T-bond PL5YT=RR -4 basis points to +296bps over bmk*
10-yr T-bond PL10YT=RR -4 basis points to +244bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +3 basis points to +457bps over bmk*
5-yr T-bond HU5YT=RR -4 basis points to +388bps over bmk*
10-yr T-bond HU10YT=RR -4 basis points to +360bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1601 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Marius Zaharia;
Editing by Susan Fenton)
