* Forint holds more than 3 pct Sept gain, off April peak
* Further gains hinge on budget details
* Other currencies little changed
* Polish bonds up before Q4 supply release
(Adds bonds, updates prices)
By Jason Hovet
PRAGUE, Sept 30 (Reuters) - Central European currencies held
their own on Thursday as the euro fell against the dollar,
pushing the Hungarian forint off a four-month peak, but losses
were capped ahead of an election that could pave the way for
more spending cuts.
Emerging European currencies, bonds and stocks have mostly
firmed this month, led by the forint, and dealers said investor
appetite for assets from the region remained strong in the face
of persisting worries about states on the euro zone periphery.
The euro, the region's main reference currency, fell versus
the dollar after Ireland detailed a mammoth bill for bailing out
Anglo Irish Bank and Moody's downgraded Spain. []
Emerging European stock markets recovered from early losses
with all but Prague <> turning positive.
The weaker euro/dollar pushed the forint down less than 0.1
percent to 277.2 to the euro by 0921 GMT, while the Polish zloty
<EURPLN=> lost 0.1 percent. The Romanian leu <EURRON=> and the
Czech crown <EURCZK=> inched up 0.1 percent.
"We are watching the euro/dollar, so we are little bit lower
but central European currencies are mostly stable," said Ivo
Prokop, a dealer at Raiffeisenbank in Prague. "People will try
to be longer (in euros versus the crown) at these levels."
The crown is trading about half a percent off a 22-month
high hit earlier this month, adding about 0.7 percent in
September overall. The forint has been the best performing
emerging European currency in September with a 3.5 percent rise.
WEEKEND POLL
The Hungarian unit could recover more of the losses it has
seen since April after local elections this weekend that are
likely to cement the ruling Fidesz party's hold on power.
Fidesz has spooked markets since sweeping April elections by
comparing its debt problems with those of Greece and suspending
International Monetary Fund aid talks. The forint is trading 5.8
percent down from an April high.
After the elections the government is expected to publish
details of its 2011 budget, key to retaining investor confidence
in Hungarian assets which have rebounded this month on pledges
to cut next year's budget gap to below 3 percent of economic
output.
"As we expect this to confirm the already announced
3 percent deficit target for 2011, we continue to recommend
constructive positions going into this period." UniCredit said.
SEB analysts said the stronger forint has weighed on the
zloty, which has dipped 1.7 percent in the past two weeks, also
hurt by some cooling of interest rate hike expectations.
Most analysts still expect the Polish bank's Monetary Policy
Council (MPC) to hike rates by 25 basis points soon. The council
left rates at record lows on Wednesday. []
"The zloty has failed to deliver on its supportive
fundamentals, carry and flow situation lately," SEB said. "The
zloty is undervalued and we contemplate adding a long position."
Polish bonds yields dropped around 2 basis points, before a
fourth quarter debt supply release at 1000 GMT.
Dealers said the supply may support the market after Deputy
Finance Minister Dominik Radziwill said this month the debt
supply is likely to be lower than the third quarter.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.559 24.573 +0.06% +7.16%
Polish zloty <EURPLN=> 3.984 3.979 -0.13% +3.01%
Hungarian forint <EURHUF=> 277.2 277.14 -0.02% -2.47%
Croatian kuna <EURHRK=> 7.297 7.295 -0.03% +0.17%
Romanian leu <EURRON=> 4.267 4.269 +0.05% -0.69%
Serbian dinar <EURRSD=> 106.48 106.01 -0.44% -9.95%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +16 basis points to 95bps over bmk*
7-yr T-bond CZ7YT=RR +1 basis points to +100bps over bmk*
10-yr T-bond CZ9YT=RR +2 basis points to +113bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -1 basis points to +393bps over bmk*
5-yr T-bond PL5YT=RR -1 basis points to +362bps over bmk*
10-yr T-bond PL10YT=RR +2 basis points to +326bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +2 basis points to +557bps over bmk*
5-yr T-bond HU5YT=RR +4 basis points to +518bps over bmk*
10-yr T-bond HU10YT=RR +2 basis points to +461bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1123 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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emerging market news []
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(Reporting by Reuters bureaus, writing by Jason Hovet; Editing
by Hugh Lawson, John Stonestreet)
