* Currencies ease on euro zone concern, equity retreat
* Election risk to forint, trade data may help crown
* Polish policy-makers try to talk down zloty
(Recasts with new comments, prices)
By Dagmara Leszkowicz and Sandor Peto
WARSAW/BUDAPEST, Feb 8 (Reuters) - Central European
currencies posted mild losses on Monday on concerns over debt in
some euro zone states, while fiscal concerns lingered around
Hungary ahead of elections to be held in April.
Opposition leader Viktor Orban reiterated the budget gap
would be higher than Hungary's target in 2010 but pledged
"frugal" policy and said his party Fidesz, widely expected to
take power, would not tie up with the far right. []
[]
InPoland, policy makers tried to take the steam out of a
rising zloty with Finance Minister Jacek Rostowski telling a
newspaper that he saw no reason for further strengthening.
Separately, Deputy Prime Minister and Economy Minister
Waldemar Pawlak told weekly Wprost that a rapid appreciation of
the unit could hurt exports and dent the pace of recovery.
[]
"The euro is suffering from the problems with Greece, and
Spain, so putting all this together makes (for) a clear view of
the potential for losses in the region," a Prague-based dealer
said.
Dealers said the risk of a rise in Hungary's budget deficit
after elections in April was additional risk to the forint and
Hungarian bonds whose yields rose by up to seven basis points.
"Comments by opposition Fidesz party leader (Viktor) Orban
did not influence the market but politics will become more
important as we approach the elections," one bond trader said.
The euro's weakness versus the dollar and a retreat of
equity markets in the past days show increased risk aversion in
the world and this overshadows domestic factors which can grow
in importance closer to elections in the region, dealers said.
Hungary's forint<EURHUF=> and the Polish zloty<EURPLN=> shed
0.3 percent, the Czech crown <EURCZK=> 0.2 percent and the
Romanian leu <EURRON=> 0.1 percent against the euro by 1502 GMT.
Equities in the region, which tracked sharp falls of global
peers last week, gave up ground after U.S. shares opened weaker.
Government bonds, mainly medium- and long-dated papers, eased.
FISCAL CONCERNS
Hungary has by far the highest debt in the region and is
vulnerable to market fluctuations triggered by fiscal problems
in the euro zone, but signs of fiscal loosening in other states
in the region are also being closely watched.
The European Union's (EU) executive proposed to extend by
one year until 2012 the deadline for Romania to cut its budget
deficit below the bloc's ceiling, 3 percent/GDP. []
A Budapest-based dealer said the fragile global market
sentiment pointed towards further forint losses, and the
currency may ease to 280 the euro if resistance levels at
274.40-275 break in the short term.
The Czech Republic posted a smaller than expected trade
surplus in December [], but analysts said
continuing recovery in foreign trade could support the crown.
Dealers said Ukraine's presidential election, where
opposition leader Viktor Yanukovich claimed victory, had no
impact on the markets of Ukraine's EU member neighbours.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.084 26.105 +0.08% +0.9%
Polish zloty <EURPLN=> 4.087 4.083 -0.1% +0.42%
Hungarian forint <EURHUF=> 273.05 272.9 -0.05% -0.99%
Croatian kuna <EURHRK=> 7.317 7.319 +0.03% -0.11%
Romanian leu <EURRON=> 4.131 4.134 +0.07% +2.58%
Serbian dinar <EURRSD=> 98.47 98.499 +0.03% -2.63%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -2 basis points to 108bps over bmk*
7-yr T-bond CZ7YT=RR +3 basis points to +151bps over bmk*
10-yr T-bond CZ10YT=RR -1 basis points to +138bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -1 basis points to +398bps over bmk*
5-yr T-bond PL5YT=RR 0 basis points to +337bps over bmk*
10-yr T-bond PL10YT=RR -1 basis points to +300bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -2 basis points to +565bps over bmk*
5-yr T-bond HU5YT=RR 0 basis points to +532bps over bmk*
10-yr T-bond HU10YT=RR -1 basis points to +483bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1047 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/Sandor Peto; editing by Patrick Graham)
