* Greece concerns weaken emerging European currencies
* Investors realign portfolios to favour crown - dealers
* Bonds mixed; Hungary auction yields "surprisingly low"
(Adds bonds, updates markets)
By Marton Dunai
BUDAPEST, April 8 (Reuters) - Emerging European currencies
weakened on Thursday as the Greek crisis continued to weigh on
markets, with the Czech crown considered a relative safe haven
and Hungarian bonds benefitting from tight supply.
"Risk aversion appeared on the global (markets). Regional
currencies ... are losing and this is mainly due to the
situation in Greece," said Maciej Slomka, chief fixed income
dealer at Pekao SA bank in Warsaw.
Uncertainty over Greece continued to widen the premium
required by investors to hold Greek debt, sparking a selloff in
stocks and hurting East European assets as well. []
The Polish zloty <EURPLN=> shed 0.6 percent, the Hungarian
forint <EURHUF=> fell 0.7 percent and the Romanian leu <EURRON=>
dipped 0.5 percent against the euro by 0956 GMT. The crown
<EURCZK=> eased 0.1 percent, giving up early gains.
"I have a feeling that the crown is one of the winners of
the recent easing of the euro," a dealer in Budapest said.
"Investors look at it as a reliable option because of the
strength of the Czech economy."
"In general foreign banks and funds were more optimistic
about the forint and the zloty (before), and as the equity
indices decline, investors quickly abandon positions in these
currencies," said Lukas Ruzicka, a J&T Banka dealer in Prague.
In early trading, the crown <EURCZK=> had firmed to 25.140
per euro, last seen in September 2009. Dealers said levels close
to 25.00 would boost speculation that the Czech central bank
will cut interest rates to a new record low of 0.75 percent.
"Further strengthening of the currency might raise the
speculations for a cut," Komercni Banka interest rate dealer
Dalimil Vyskovsky said in a morning note.
Investors were also trying to decipher news out of Poland
about the future course of monetary policy.
Although most investors expect Polish rates to stay on hold,
a new central bank policy maker said interest rates could rise
25-50 basis points in the second half, possibly with no advance
warning. []
The Romanian leu <EURRON=> was hurt by poor industrial
output data for February, which showed a month-on-month fall of
2.5 percent and prompted more rate cut talk. []
"Further rate cuts are expected to support a not yet
recovered economy," said one dealer with a foreign bank in
Bucharest.
BONDS MIXED
Fresh fears about the stability of the Greek banking system
eroded bond prices in Poland, said Slomka of Bank Pekao, adding
that recent levels were inflated, and a correction was on the
cards anyway.
"Bond (prices) have recently reached quite high levels so
even without these Greek woes a correction on the market
wouldn't be unlikely," he said.
In Hungary, bonds suffered from a Greece-induced selloff in
early trading but yields quickly corrected after a bond auction
that brought healthy demand especially in the long and short
ends, while supply remained low, a dealer said.
"The yield levels at the auction were surprisingly low," she
said. "A single investor snapped up the entire three-year
supply, and the 10-year paper was in demand as well."
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.187 25.159 -0.11% +4.49%
Polish zloty <EURPLN=> 3.848 3.825 -0.6% +6.65%
Hungarian forint <EURHUF=> 267.92 266.18 -0.65% +0.91%
Croatian kuna <EURHRK=> 7.262 7.27 +0.11% +0.65%
Romanian leu <EURRON=> 4.11 4.088 -0.54% +3.1%
Serbian dinar <EURRSD=> 99.579 99.47 -0.11% -3.71%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +4 basis points to +72bps over bmk*
7-yr T-bond CZ7YT=RR +1 basis points to +90bps over bmk*
10-yr T-bond CZ10YT=RR -3 basis points to +84bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +2 basis points to +366bps over bmk*
5-yr T-bond PL5YT=RR +4 basis points to +315bps over bmk*
10-yr T-bond PL10YT=RR +3 basis points to +256bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +4 basis points to +462bps over bmk*
5-yr T-bond HU5YT=RR +4 basis points to +402bps over bmk*
10-yr T-bond HU10YT=RR +1 basis points to +365bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1156 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 []
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(Reporting by Reuters bureaux, writing by Marton Dunai; Editing
by Susan Fenton)
