* Czech cbank keeps rates flat, parlt takes stage
* Romanian centre-left govt survives no-confidence vote
* Hungarian bond yields fall 3-7 bps after debt tenders
* Albanian lek nears record low
(Recasts, adds Albanian lek)
By Marius Zaharia and Jason Hovet
BUCHAREST/PRAGUE, Sept 24 (Reuters) - Romania's leu rose to
a six-week high on Thursday after the government survived a
no-confidence vote, while doubts over whether Czech lawmakers
would approve an austerity package kept the crown in check.
In Albania, officials called for calm after the lek currency
<EURALL=> neared a record low against the euro, prompted by
comments a week ago from Prime Minister Sali Berisha that
Albania should adopt the common EU currency. []
Unlike in central Europe, the Balkan state has a less liquid
market and fewer opportunities for portfolio investment.
Analysts saw little chance of fallout in emerging Europe's other
more liquid markets, which ignored the development.
"I don't think it has any implications for CEE and certainly
it will not change the ECB's view that unilateral adoption from
euro candidate countries is an acceptable path," said Raffaella
Tenconi, chief economist at Wood & Co.
Hungarian bonds extended gains, with yields falling as much
as 7 basis points after the debt agency sold more bonds than
planned at Thursday auction. [] [].
The central bank is expected to cut 50 basis points on
Monday to bring the main interest rate to 7.5 percent.
Expectations rates would bottom out at 5.75 percent next
year have given a lift to markets there even as spiralling
government deficits in the region slows a summer rally.
The Czech central bank kept interest rates at a record low
of 1.25 percent on Thursday, but markets mainly watched
parliament, where a Wednesday deal on budget savings to slash
the deficit looked fragile and the interim government again
threatened resignation. [] []
"This risky scenario could push politicians to act
responsibly," Komercni Banka said in a note. "We expect some
kind of market relief reaction in this case (of accepting the
package), otherwise there is a risk of bonds sell-off."
The austerity measures would cut the 2010 budget gap from an
expected 7.5 percent of gross domestic product to 5.2 percent.
The Czech crown <EURCZK=> bid down a touch on the day at
25.21 to the euro, while bond yields inched lower.
NOT OUT OF WOODS
Romania's leu <EURRON=> gained 0.3 percent to 4.212 to the
euro by 1602 GMT, pacing gains in the region as the Hungarian
forint <EURHUF=> rose 0.2 a percent, while the Polish zloty gave
up earlier gains to bid 0.1 percent down on the day.
The victory of Romania's centre-left government in gave it
approval for tough spending cuts required by the International
Monetary Fund in return for aid. []
The leu has been the region's star performer this week with
a 1.2 percent rise since the IMF approved a new loan tranche on
Monday. However, dealers speculated Romania's central bank
intervened this week to prop it up.
The economic crisis crushed central European economic growth
with only Poland avoiding recession. Analysts say the worst has
likely passed, but growing unemployment and widening fiscal gaps
will make recovery sluggish and most investors are less bullish
on central Europe than other emerging regions.
EBRD president Thomas Mirow said on Wednesday the credit
crunch was far from over and that the region may enter a period
of low or zero growth [].
Moody's warned on Monday it may consider cutting Poland's
rating if no fiscal reforms will be taken after next year's
elections [].
The zloty, which many strategists tip to outperform peers
due to better growth prospects, brushed off the news but was
down on the day as worries of a larger corporate dividend payout
could swamp the market continued to weigh.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.21 25.152 -0.23% +6.12%
Polish zloty <EURPLN=> 4.186 4.183 -0.07% -1.7%
Hungarian forint <EURHUF=> 270.65 271.05 +0.15% -2.62%
Croatian kuna <EURHRK=> 7.263 7.263 0% +1.4%
Romanian leu <EURRON=> 4.212 4.226 +0.33% -4.69%
Serbian dinar <EURRSD=> 93.07 93.077 +0.01% -3.86%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -15 basis points to 166bps over bmk*
7-yr T-bond CZ7YT=RR +1 basis points to +181bps over bmk*
10-yr T-bond CZ10YT=RR +2 basis points to +173bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +1 basis points to +389bps over bmk*
5-yr T-bond PL5YT=RR +10 basis points to +334bps over bmk*
10-yr T-bond PL10YT=RR +4 basis points to +287bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -10 basis points to +561bps over bmk*
5-yr T-bond HU5YT=RR 0 basis points to +513bps over bmk*
10-yr T-bond HU10YT=RR -1 basis points to +438bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1804 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet, Marius
Zaharia and Dagmara Leszkowicz; Editing by Andy Bruce/Patrick
Graham/Victoria Main)
