(Adds details, fixed income, byline)
By Jason Hovet
PRAGUE, Oct 13 (Reuters) - Central European currencies and
stocks rallied on Monday, with Hungary's forint out in front,
after a euro zone plan to shore up the European banking sector
lifted investor sentiment towards riskier assets.
But statements from Poland's central bank chief that the
economic crisis may prompt Warsaw to rethink its 2012 euro entry
goal [] and an offer of financial and technical aid
to Hungary from the International Monetary Fund signalled the
region was still under pressure [].
The forint <EURHUF=> jumped 2.7 percent to 253.1 versus the
euro by 0851 GMT after heavy falls the past two sessions, while
the Polish zloty <EURPLN=> rebounded to 3.547 per euro, up 1
percent from Friday's domestic close.
The Czech crown <EURCZK=> added 1.1 percent to 24.6 against
the euro and Romania's leu <EURRON=> gained 0.5 percent to 3.775
per euro.
"It seems confidence has come back to the market," said
Lukasz Wojtkowiak, foreign exchange analyst at Millennium Bank.
He added a stronger euro, the region's main reference currency,
against the dollar has also boosted currencies.
Market gains come after taking a beating in the global
sell-off on Friday, when the forint fell to a fresh two-year low
in early trade to 272 versus the euro before recovering late in
the session.
Hungary, along with Romania, has come under tougher scrutiny
from investors with its higher reliance on foreign credit and
large loan-to-deposit ratio.
The financial crisis has hit new levels in the past month,
with banks under strain and governments in Iceland, the Benelux
region and Britain needing to help some troubled lenders.
Over the weekend, euro zone leaders meeting agreed a plan
which included providing capital for banks caught short of funds
and left out of frozen credit markets.
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East Europe stock exchanges all touched multi-year lows on
Friday amid the global sell-off sparked by concerns that the
crisis was spilling over in the region. On Monday, bourses
rebounded with Prague and Budapest cutting Friday's losses in
half with gains of 7.6 percent and 8.4 percent, respectively.
Central European banks have for the most part been out of
the fray in the year-old credit crunch, but signs have appeared
that the region could get dragged deeper into the troubles.
The Czech Finance Ministry said on Monday it was not
planning any rescue package for the banking sector because the
country's financial institutions were healthy [].
In Poland, leaders from government and banks planned to meet
later on Monday to discuss measures needed to aid the banking
sector there [], but the central bank's head said
banks had ample liquidity [].
Regional bond markets continued to be hit by a liquidity
squeeze that has kept sellers away in recent weeks.
"The market continues to be ruled by a lack of confidence
and a lack of liquidity," a Budapest dealer said.
Hungary put in place new measures on Friday to boost
floundering markets, including easing regulation on pension
funds and cutting back debt issues, while the Czech central bank
said it was looking for ways to boost its bond market. In more
liquid Poland, the market has also neared a standstill.
"Prices are appearing but there's no 'mid' since we have
only 'bids', with no 'asks'," said Piotr Nurzynski, a dealer at
PKO BP.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 24.600 24.865 +1.07% +7.16%
Polish zloty <EURPLN=> 3.547 3.581 +0.95% +1.49%
Hungarian forint <EURHUF=> 253.130 260.150 +2.70% -0.11%
Croatian kuna <EURHRK=> 7.139 7.138 -0.01% +2.56%
Romanian leu <EURRON=> 3.775 3.795 +0.53% -5.44%
Serbian dinar <EURRSD=> 81.292 80.638 -0.81% -3.21%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -17 basis points to 54bps over bmk*
5-yr T-bond CZ5YT=RR -14 basis points to +27bps over bmk*
10-yr T-bond CZ9YT=RR -12 basis points to +31bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -15 basis points to +322bps over bmk*
5-yr T-bond PL5YT=RR -20 basis points to +246bps over bmk*
10-yr T-bond PL10YT=RR -12 basis points to +201bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -17 basis points to +840bps over bmk*
5-yr T-bond HU5YT=RR -20 basis points to +801bps over bmk*
10-yr T-bond HU10YT=RR -12 basis points to +681bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1051 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet; Editing
by Toby Chopra)
