* Forint and zloty inch lower, crown up 0.2 pct
* Dealers say sentiment still shaky
* Bonds also down, following currencies
(Adds fixed income, details)
By Dagmara Leszkowicz
WARSAW, March 17 (Reuters) - Poland's zloty and the
Hungarian forint edged a touch lower against the euro on
Tuesday, but emerging European currencies broadly held onto
recent gains as a rally in stocks paused in Europe.
At 0938 GMT the forint <EURHUF=> was 0.5 percent down to the
common currency to bid at 298.1, and the zloty <EURPLN=> dipped
to 4.47 per euro. The Czech crown <EURCZK=> gained 0.2 percent
to 26.56 versus the common currency.
Asian stock markets hit a one-month high on Tuesday, but
Europe opened lower after five days of gains which have shown
some return of investors' risk appetite and eased pressure on
battered emerging markets.
"The recent recovery is likely to be continued today as the
Asian equity market gains, but from my point of view the speed
(of recovery) will definitely slow," said Commerzbank emerging
market analyst Ulrich Leuchtmann.
The forint, zloty and crown gained 3-6 percent last week, as
hopes grew that the troubled global banking sector was near a
turning point.
The Swiss central bank's move to sell the franc also gave
support and brought relief to central European borrowers who
sought franc loans due to higher domestic borrowing costs.
But the region's currencies have still lost sharply since
the fall of Lehman Brothers last September, with the zloty down
25 percent and the forint 19 percent. Romania's leu is 18.7
percent off since mid-September, while the crown has dropped 9.3
percent.
NOT OVER YET
The leu <EURRON=> also inched lower on Tuesday, though it
has held up well in the last month compared to its peers as
investors await signs of how much money the country may seek
from the EU, IMF and other financial institutions.
Most analysts, however, say the broadly weaker tone for the
region this year has not disappeared given concerns over growth,
financing and cuts in local interest rates.
"The market can still be surprised by the incoming data
(from the region), but also -- and this concerns mostly Poland
-- the monetary policy seems to be sometimes inappropriate,"
said Leuchtmann.
The Polish central bank has cut interest rates by a total of
200 basis points since late last year, bringing its key rate to
4.00 and is expected to cut by another 25 basis points at its
March sitting next week.
But analysts expect Romanian and Hungarian rate setters to
move cautiously due to market fragility. Czech central bankers
said last month currency weakness took further rate cuts out of
the debate, but the crown's recent strengthening has opened up
space in many analysts' view.
The bond market in the region weakened on Tuesday, tracking
currencies. In Warsaw, dealers said papers may strengthen if the
MPC decides to cut rates at a sitting at the end of March.
"The relatively strong zloty may prompt the MPC to cut rates
again, and that would be supportive for the bond market," said
Maciej Slomka, chief dealer at Pekao bank in Warsaw.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.563 26.62 +0.21% +0.72%
Polish zloty <EURPLN=> 4.472 4.464 -0.18% -7.98%
Hungarian forint <EURHUF=> 298.71 297.25 -0.49% -11.77%
Croatian kuna <EURHRK=> 7.45 7.425 -0.34% -1.14%
Romanian leu <EURRON=> 4.291 4.281 -0.23% -6.45%
Serbian dinar <EURRSD=> 93.86 94.443 +0.62% -4.67%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -2 basis points to 232bps over bmk*
4-yr T-bond CZ4YT=RR -26 basis points to +249bps over bmk*
8-yr T-bond CZ8YT=RR +5 basis points to +311bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR 0 basis points to +429bps over bmk*
5-yr T-bond PL5YT=RR +2 basis points to +376bps over bmk*
10-yr T-bond PL10YT=RR -1 basis points to +302bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -21 basis points to +1058bps over bmk*
5-yr T-bond HU5YT=RR -56 basis points to +981bps over bmk*
10-yr T-bond HU10YT=RR -47 basis points to +806bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 0938 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)
