* Fx retreat again as markets wary on Greece
* Polish finmin says E.Europe more sheltered than eurozone
* Markets eye rate meetings next week in Czech, Romania
* Hungary cbank/new govt conflict watched by markets
By Marius Zaharia and Krisztina Than
BUCHAREST, April 30 (Reuters) - Central European currencies
retreated late Friday as investors continued to be wary of a
spillover threat from Greece and waited for more news on the
bailout while also eyeing rate meetings in the region next week.
The European Commission said on Friday talks to finalise the
overall rescue package, crucial to avoid default, could be
wrapped up by Saturday. []
"The market reaction will depend on the specifications of
the package and how fast it will pass the German Parliament,"
Erste Bank analysts said in a note.
"For next week, all that can be said is that the newsflow
now looks promising enough for this to continue making the
spillover into the (CEE) region short-lived," they added.
Central European markets, which had been largely immune to
Greece's problems this year due to their relatively strong
growth outlooks and lower debt, have been hit hard this week
after ratings downgrades for three euro zone periphery states.
"While no country has escaped, the contagion risks appear
greatest in Bulgaria and Romania, where financial linkages with
Greece are strong, and Hungary where fiscal risks are greatest,"
Capital Economics said.
It said due to more solid macro fundamentals the Czech
Republic remained "comparatively insulated."
Polish Finance Minister Jacek Rostowski said the region's
countries were more sheltered than other nations in Europe from
risks of contagion, saying the average debt was 40 percent of
GDP, half of that of euro zone members [].
Hungary's forint <EURHUF=>, which outperformed regional
peers earlier this month and was buoyed by the prospect of a
strong new government after April elections, had been also
impacted by Greek woes, and growing pressure on the central bank
from the Fidesz party added to negative market sentiment.
Several Fidesz politicians including Prime Minister elect
Viktor Orban lashed out against central bank Governor Andras
Simor this week, and analysts warned an attempt to remove Simor
could lead to market turbulance and objections from the European
Central Bank (ECB). []
At 1420 GMT the forint <EURHUF=> was down 0.6 percent, the
Polish zloty <EURPLN=> lost 0.4 percent while the Czech crown
<EURCZK=> was down 0.5 percent from the previous close.
"Over the weekend there will be some announcement about the
Greek package and a lot will depend on that," a currency dealer
in Budapest said.
Hungarian yields dropped 4-5 basis points early in the day
and Czech bond yields also dropped around 5 basis points.
Data showed on Friday the U.S. economy expanded at a 3.2
percent annual rate in the first quarter, coming in a touch
weaker than analysts had expected but the details of the data
report were fairly upbeat. []
RATE MEETINGS
Besides the Greek debt saga, investors will be watching rate
meetings in Romania and the Czech Republic next week.
Czech swaps <CZKIRS> and forward <CZKFRA> markets have
priced in around a 50 percent chance of an interest rate cut
next week but the large majority of analysts in a Reuters poll
on Friday saw no change. []
"As the market is still pricing in around 50 pct of a 25bp
cut ahead of the meeting, a no-cut decision could drive up the
short end of the curve further," Societe Generale analysts said.
"Moreover, we continue to believe the market is not
pricing in enough rate hikes over a 1-2 year horizon."
In Romania the question is whether risks from a spillover
from Greece would increase cautiousness and sway the central
bank to slow down the easing pace to 25 basis points.
"At the next monetary policy meeting on Tuesday, the central
bank could cut the key rate by 25bp to a record low of 6.25
percent," Erste analysts said.
"Another 25bp cut in late June is highly dependent on the
inflation outlook," they added.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.571 25.45 -0.47% +2.92%
Polish zloty <EURPLN=> 3.925 3.909 -0.41% +4.56%
Hungarian forint <EURHUF=> 267.9 266.23 -0.62% +0.91%
Croatian kuna <EURHRK=> 7.255 7.246 -0.12% +0.75%
Romanian leu <EURRON=> 4.128 4.132 +0.1% +2.65%
Serbian dinar <EURRSD=> 99.14 99.32 +0.18% -3.29%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -11 basis points to 96bps over bmk*
7-yr T-bond CZ7YT=RR -8 basis points to +79bps over bmk*
10-yr T-bond CZ10YT=RR -3 basis points to +108bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +1 basis points to +368bps over bmk*
5-yr T-bond PL5YT=RR +1 basis points to +314bps over bmk*
10-yr T-bond PL10YT=RR +1 basis points to +260bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -6 basis points to +440bps over bmk*
5-yr T-bond HU5YT=RR -4 basis points to +405bps over bmk*
10-yr T-bond HU10YT=RR -4 basis points to +366bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1420 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 Dtephen Nisbet)
