(Adds new comments, updates prices)
By Sandor Peto
BUDAPEST, Dec 12 (Reuters) - Central European currencies and
stocks extended early morning falls on Friday as the collapse of
a U.S. auto sector bailout and a raft of poor economic data in
the region weighed on sentiment.
Czech industrial output data released on Friday showed a 7.6
percent annual fall in October, the worst result in almost eight
years [], while final Hungarian output figures
confirmed a 7.2 percent annual decline [].
The Czech crown traded at 25.945 against the euro <EURCZK=>
by 0927 GMT, 0.5 percent weaker from Thursday's close, after it
briefly dropped below the 26.00 level to a seven-week low
following disappointing Czech industrial output data.
Dealers said market volatility was high due to low volumes.
"The activity is virtually zero, and even a small volume can
move it (the market)... it is almost impossible to say that this
and that was behind the move," a Prague-based dealer said.
"The data are very bad, and probably they will not improve
in following months, so of course one tends to say that the
Czech crown will be weaker and weaker," he added.
Hungary's forint <EURHUF=> shed 0.5 percent on the day.
"The story is that the U.S. auto bailout plan failed which
will have an impact as some of the companies affected also
operate in the region," one Budapest-based dealer said.
In the broader region Poland's zloty <EURPLN=> led the
losses, falling 1.85 percent to 3.908 against the euro ahead of
the publication of October current account data at 1300 GMT.
"A high current account deficit in Poland, expected fall of
output in the euro zone and retail sales in the U.S. won't help
the zloty either," Bank BPH wrote in a note to clients.
Polish bonds were little changed, also eyeing current
account data to be released later in the day.
"The bond market is calm, trade volumes are low. We are
waiting for today's current account data, but inflation and
wages on Monday will be key as well," said a fixed-income dealer
at a Warsaw-based bank.
"Although the market has already priced in a 50 bps rate cut
in December," he said.
"Overall, the market should remain calm till the end of the
year. This time of year is generally not characterised by a
willingness to take risk. This does not rule out some
window-dressing, however, as every year."
Traders said the Hungarian bond market remained very
illiquid due to a shortage in offers but on the few papers
traded offered yields rose by about 20 basis points from
Thursday's session.
In equity markets, Budapest's BUX index<> fell by 3.75
percent to 12,205, Prague's PX<> declined by 2.9 percent to
823.1 and Warsaw's WIG<> shed 2.3 percent to 27,518.
"Everything is going downhill fast after the plan to save
U.S. automakers failed," said a dealer with a foreign bank in
Bucharest.
Deteriorating growth prospects and a decline in inflation
have been fuelling expectations for central bank interest rate
cuts in the region.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 25.89 25.74 -0.49% +2.29%
Polish zloty <EURPLN=> 3.961 3.908 -1.85% -10.01%
Hungarian forint <EURHUF=> 263.56 262.9 -0.5% -4.24%
Croatian kuna <EURHRK=> 7.181 7.181 0% +1.97%
Romanian leu <EURRON=> 3.915 3.906 -0.18% -9.35%
Serbian dinar <EURRSD=> 86.719 85.731 -0.31% -10.08%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +4 basis points to 167bps over bmk*
5-yr T-bond CZ5YT=RR +3 basis points to +132bps over bmk*
10-yr T-bond CZ9YT=RR +6 basis points to +103bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -35 basis points to +717bps over bmk*
5-yr T-bond HU5YT=RR -45 basis points to +665bps over bmk*
10-yr T-bond HU10YT=RR +16 basis points to +545bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1121 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
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(Reporting by Reuters bureaus, Writing by Sandor Peto;
Editing by Tony Austin/Victoria Main)
