CEE MARKETS 2-FX falls further on risk aversion, grim data

                                
  (Adds fixed income, detail, byline)
                                
 By Dagamara Leszkowicz
                                
 WARSAW, Feb 12 (Reuters) - Central European currencies
retreated further on Thursday, hurt by investor risk aversion
after a cool reception to U.S. bank bailout plans and further 
negative data in the region.
                                
 Hungary's forint dropped 1 percent by 1045 GMT to 298.76 to
the euro, while the Polish zloty <EURPLN=> was off 0.6 percent
from Wednesday's domestic close to bid at 4.59 and the Czech
crown <EURCZK=> fell to 28.69/euro, down 0.6 percent.
                                
 A recent currency rally has withered due to rising risk
aversion, signs of a deepening global recession and fears that 
U.S. bailout and stimulus packages may not take effect quickly.
[ID:nHKG11837]
                                
 A fresh round of data has showed further deterioration in
the region's export-strong economies.
                                
 "The trend is still up (to weaker exchange rate levels),
said a Prague trader, adding economic problems are just at a
beginning.
                                
 On Thursday, Poland's Labour Ministry said unemployment rose
to 10.5 percent in January from 9.5 percent in December, the
fastest increase in seven years and the highest among central
European EU newcomers.
                                
 Romanian inflation climbed to 6.7 percent in January and
unadjusted industrial output plunged 18 percent year on year in
December, underlining the central bank's dilemma of trying to
ease borrowing costs to help the economy at a time of rapid
price growth.
                                
 Analysts said inflation had been boosted by a 6.5 percent
decline in the exchange rate since the beginning of the year.
The leu <EURRON=> dipped 0.2 percent to 4.29 per euro on
Thursday.
                                
 "The increase in the inflation rate is purely driven by
moves on the exchange rate market, which in turn has been hit by
global environment," Bartosz Pawlowski at TD Securities wrote. 
                                
 "Therefore, except for occasional interventions on the
currency market, the NBR has very limited tools to fight the
pass-through mechanism."
                                
 The Czech current account deficit widened to 20.63 billion
crowns, more than expected, in December but it was still the
lowest in the region, analysts said. [ID:nLC148675]
                                
 
                                
 BETS DOWN
                                
 Commerzbank recomended hedging strategies on Wednesday to
profit from a falling zloty, saying further declines are likely.
[ID:nLB483273]
                                
 TD Securities also recommended staying long the euro against
the forint as it saw a case for further weakening [ID:nLB370490]
                                
 Dealers and analysts said worsening Russian data on foreign
exchange reserves could also fuel falls.
                                
  "It is crucial for the Emerging Markets as it is an
indicator that strongly affects investor's risk appetite or lack
of it," said Urlich Leuchtmann, head of foreign exchange
research at Commerzbank. 
                                
 Russia's central bank said early on Thursday its exchange
reserves fell to 383.5 billion dollar on February 6 from 388.1
billion in the previous week.[ID:nMOS005386]
                                
 In a closely-watched debt auction, Hungary issued its first
state debt since October, when it had to accept a $25 billion
bailout from the IMF and the European Union.
                                
 It sold 5 billion Hungarian forints ($21.85 million) worth
of 10-year 2019/A bonds and 2015/A bonds, and 10 billion forints
worth of 2012/B bonds. All of the auctions, whose coupons ranged
from 9.90 percent to 11.37 percent, were heavily oversubscribed.
                                
 
----------------------MARKET SNAPSHOT-------------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2009 
Czech crown      <EURCZK=>   28.693   28.513  -0.63%    -6.76%
Polish zloty     <EURPLN=>    4.593    4.566  -0.59%    -10.41%
Hungarian forint <EURHUF=>  298.76   295.67   -1.03%    -11.79%
Croatian kuna    <EURHRK=>    7.429    7.42   -0.12%    -0.86%
Romanian leu     <EURRON=>    4.292    4.279  -0.3%     -6.47%
Serbian dinar    <EURRSD=>   93.233   92.591  -0.69%    -4.03%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR    -23 basis points to  148bps over bmk*
4-yr T-bond   CZ4YT=RR   +14 basis points to  +151bps over bmk*
8-yr T-bond   CZ8YT=RR    -1 basis points to  +245bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR    -3 basis points to  +395bps over bmk*
5-yr T-bond   PL5YT=RR   +2 basis points to  +321bps over bmk*
10-yr T-bond PL10YT=RR   +4 basis points to  +284bps over bmk*
Yield Spreads
*Benchmark is German bond equivalent.
All data taken from Reuters at 1146 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)