(Adds fixed income, detail, background)
By Dagmara Leszkowicz
WARSAW, Feb 11 (Reuters) - Emerging Europe currencies
slipped on Wednesday after a U.S. bank rescue plan disappointed
investors, driving down global stocks, while Polish FX options
and Czech output data added to downward pressures.
At 0934 GMT the Polish zloty <EURPLN=> was almost 2 percent
down against the euro, while the forint <EURHUF=> and the crown
<EURCZK=> were down 1.8 percent and 1.2 percent respectively
versus the common currency.
Late on Tuesday U.S. Treasury chief Timothy Geithner
unveiled a plan that would inject 2 trillion dollars into the
banking system to heal it, but stock markets dived.[]
The 4.6 percent plunge in the Dow Jones index "adds to the
weak sentiment, and this has hit the whole emerging universe," a
Budapest-based currency dealer said.
Currencies had briefly rebounded from new lows posted last
week as investors started to take fresh interest in riskier
assets, but reverted to their declining trend on Tuesday.
OUTPUT, OPTIONS THREATEN
Analysts in Poland said the zloty could also be weakened by
continuing worries about currency options.
On Tuesday the country's Economy Minister Waldemar Pawlak,
who heads the junior party in the ruling coalition, said he
would propose a law at a government meeting next week to allow
companies to walk away or renegotiate the terms of their
outstanding contracts with banks.[]
However some dealers said the plan is likely to fail because
scrapping these transactions may be impossible.
The government is set to discuss the issue at its meeting
scheduled for next week.
In the Czech Republic, data showing industrial output
contracted 14.6 percent year-on-year in December could also
weigh on the currency. [].
One Prague-based dealer said the data caused a quick
weakening, but "the story is already known."
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 28.555 28.215 -1.19% -6.31%
Polish zloty <EURPLN=> 4.535 4.448 -1.92% -9.26%
Hungarian forint <EURHUF=> 293.83 288.44 -1.83% -10.31%
Croatian kuna <EURHRK=> 7.42 7.423 +0.04% -0.74%
Romanian leu <EURRON=> 4.266 4.243 -0.54% -5.9%
Serbian dinar <EURRSD=> 92.54 92.361 -0.19% -3.31%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +4 basis points to 165bps over bmk*
4-yr T-bond CZ4YT=RR +3 basis points to +129bps over bmk*
8-yr T-bond CZ8YT=RR -1 basis points to +233bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -1 basis points to +366bps over bmk*
5-yr T-bond PL5YT=RR +3 basis points to +294bps over bmk*
10-yr T-bond PL10YT=RR +6 basis points to +250bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -21 basis points to +933bps over bmk*
5-yr T-bond HU5YT=RR -55 basis points to +835bps over bmk*
10-yr T-bond HU10YT=RR -40 basis points to +663bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 0934 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 Ruth Pitchford)
