* Zloty leads retreat, stocks fall on risk aversion
* Crown steadies after slip following cbank resignation
* Hungarian bonds rally more, cbanker sees room for rate cut
(Adds bonds, updates prices)
By Jason Hovet and Sandor Peto
PRAGUE/BUDAPEST, April 16 (Reuters) - Central European currencies dipped on
Friday as stocks gave up gains amid rising risk aversion due to Greece's debt
crisis.
Concerns about Greece weakened the region's reference unit, the euro, while
market intervention by the Polish central bank a week ago still weighed on the
zloty <EURPLN=>, the region's most liquid currency.
The forint and Hungarian bonds, however, were supported by optimism that the
centre-right Fidesz party will increase its lead in a run-off election on April
25 and, once in government, will steer the economy in the right direction,
dealers said.
Hungarian bonds outperformed and 10-year yields dropped to new 4-1/2 year
lows, extending a rally that was also underpinned by comments from monetary
policy committee member Ferenc Karvalits who said there was room for further
monetary easing. []
Emerging European stocks <> <> <> have shot up this week to
levels last seen at the start of the financial crisis -- lending support to
currencies, which have risen sharply this year -- but fell on Friday with global
shares.
"Stocks are down, U.S. jobless data was poor and investors are also looking
at Greece. Risk is off the table today," said one trader in Bucharest.
By 1345 GMT, the Polish zloty <EURPLN=> led losses, falling 0.4 percent to
3.874 to the euro. The Romanian leu <EURRON=> and the forint lost 0.1 percent
but the Czech crown <EURCZK=> firmed 0.1 percent.
Both the zloty and the leu shed 0.7 percent over the week. The crown gained
0.3 percent, while the forint surged 1.6 percent following the first round of
elections to around 263.
"If Fidesz wins two-thirds of the seats in Parliament, domestic markets will
be mega-bullish, if it doesn't, they will be super-bullish," one currency dealer
said, adding, however, that the forint would probably not firm much beyond 260.
On Friday the euro eased to below the key 1.35 mark against the U.S. dollar
in afternoon trade on growing doubt over Greece's ability to service its debt.
[]
CROWN STEADIES
The Czech crown held around 25.13 to the euro after retreating from the
psychologically important 25 per euro level this week. It had dipped on Thursday
after central bank Governor Zdenek Tuma announced he was leaving his post early
to reduce a lengthy period of speculation about his successor. []
Two central bank vice-governors were seen as the top candidates to replace
him.
"Despite (Tuma's) resignation, we think that the impact on the Czech markets
will be rather short-lived and limited," Danske Bank said. "We remain
fundamentally bullish on the CZK in both the short and long term."
Hungarian bonds rallied more on the long end on expectations of lower
interest rates and tight domestic supply. Yields on the 10-year bond dropped 6
basis points to 6.33 percent.
The central bank's Karvalits said inflation and economic prospects did not
warrant tighter monetary conditions and the central bank (NBH) had room for
further rate easing.
"We expect additional cuts of 50 basis points (in the 5.5 percent NBH base
rate), but FRAs (forward rate agreements) price in as much as 75 basis points,"
one dealer said.
The bank will hold its next rate meeting on April 26.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.129 25.155 +0.1% +4.73%
Polish zloty <EURPLN=> 3.874 3.86 -0.36% +5.94%
Hungarian forint <EURHUF=> 263.18 263 -0.07% +2.72%
Croatian kuna <EURHRK=> 7.255 7.255 0% +0.75%
Romanian leu <EURRON=> 4.142 4.136 -0.14% +2.3%
Serbian dinar <EURRSD=> 99.1 98.93 -0.17% -3.25%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +2 basis points to 55bps over bmk*
7-yr T-bond CZ7YT=RR +1 basis points to +57bps over bmk*
10-yr T-bond CZ10YT=RR +2 basis points to +52bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +3 basis points to +350bps over bmk*
5-yr T-bond PL5YT=RR +2 basis points to +288bps over bmk*
10-yr T-bond PL10YT=RR +3 basis points to +241bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +3 basis points to +421bps over bmk*
5-yr T-bond HU5YT=RR +2 basis points to +355bps over bmk*
10-yr T-bond HU10YT=RR +3 basis points to +322bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1545 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 bureaus, writing by Jason Hovet/Sandor Peto, editing by
Susan Fenton)
