* Stocks reverse gains to pull down FX
* Leu waits for clear political picture
(Recasts with leu, updates throughout)
By Jason Hovet
PRAGUE, Oct 15 (Reuters) - The leu held steady near 7-month
lows on Thursday as markets held back judgment of Romania's
proposed new prime minister, while other central European
currencies mostly gave up gains after a stock rally cooled.
The region's bourses reversed gains in the afternoon along
with global stock markets after Goldman Sachs' <GS.N> earnings
missed some investors' expectations, knocking appetite for
riskier emerging market assets. []
In Romania, President Traian Basescu nominated respected
central bank adviser Lucian Croitoru as the next prime minister
in a bid to strengthen the country's response to recession.
But he faces stiff opposition from two political parties
which control just over 50 percent of the seats in parliament
and observers say he has limited chances to win approval.
The nomination comes after the outgoing cabinet lost a
no-confidence vote this week, fuelling a political crisis that
has raised worries over the country's 20 billion euro aid
package from the International Monetary Fund. []
The IMF said on Thursday it did not expect an interruption
to Romania's aid but that a review mission would visit Bucharest
once a new government is formed. []
The leu <EURRON=> was down a tick at 4.297 to the euro by
1435 GMT.
"The market right now is more willing only to trade the hard
facts and not some political outlook. They want to see action
not political clutter," said Ulrich Leuchtmann, head of foreign
exchange research at Commerzbank in Frankfurt.
Romania followed Hungary and Latvia in securing aid to help
it through the economic crisis.
Analysts say the IMF -- after only aiming to help countries
through the height of the crisis earlier this year and avoid
contagion in eastern Europe -- is starting now to take a firmer
hand with aid countries as the crisis eases and markets calm.
"Now they can afford to be more critical because the market
can deal with this increased risk," Leuchtmann said.
BALANCED NOW
The Polish zloty <EURPLN=> and Hungarian forint <EURHUF=>
added to their around 1.5 percent gains this month, edging up
0.3 percent and 0.04 percent respectively but off morning highs.
The crown <EURCZK=>, which along with the leu has dropped
more than a percent this month, rose 0.3 percent.
Analysts have warned political uncertainty in Romania along
with spillover fears from Latvia, which is wrangling over public
spending cuts needed to protect an IMF aid package and a
currency peg, could again knock the region lower. []
Still, higher risk appetite in global markets has buoyed
central Europe this week even as political instability rises and
governments struggle to control growing budget deficits.
Poland, the only country in the region to avoid recession,
is counting on privatisation funds to keep its budget gaps from
triggering debt levels that, if breached, would require steep
mandatory spending cuts.
The Polish treasury ministry said on Wednesday that sole
bidder German utility RWE <RWEG.DE> would not make a binding
offer for Polish peer ENEA <ENAE.WA>, putting the sale in doubt
for this year. []
"A clear blow to the dynamics of the privatisation process
and an Achilles heel of the whole budget programme," Cheuvreux
economist Simon Quijano-Evans said in a Thursday note.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.804 25.868 +0.25% +3.68%
Polish zloty <EURPLN=> 4.201 4.215 +0.33% -2.05%
Hungarian forint <EURHUF=> 267.03 267.15 +0.04% -1.3%
Croatian kuna <EURHRK=> 7.257 7.254 -0.04% +1.49%
Romanian leu <EURRON=> 4.297 4.296 -0.02% -6.58%
Serbian dinar <EURRSD=> 93.02 93.02 0% -3.81%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +11 basis points to 129bps over bmk*
7-yr T-bond CZ7YT=RR -9 basis points to +130bps over bmk*
10-yr T-bond CZ10YT=RR -10 basis points to +107bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +4 basis points to +516bps over bmk*
5-yr T-bond HU5YT=RR +3 basis points to +461bps over bmk*
10-yr T-bond HU10YT=RR -3 basis points to +407bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1637 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
For related news and prices, click on the codes in brackets: All
emerging market news []
Spot FX rates
Eastern Europe spot FX <EEFX=> Middle East spot FX <MEFX=>
Asia spot FX <ASIAFX=> Latin America spot FX <LATAMFX=>
Other news and reports
World central bank news [] Economic Data Guide <ECONGUIDE>
Official rates [] Emerging Diary []
Top events [] Diaries [] Diaries Index []
(Reporting by Reuters bureaus, writing by Jason Hovet, editing
by Mike Peacock and Victoria Main)
