(Adds details, comments, fixed income)
By Marius Zaharia
BUCHAREST, Nov 5 (Reuters) - Central European currencies
lost ground on Wednesday and stocks slid after a week of gains
following an end to the U.S. election, while Serbia's central
bank stepped in to tame the dinar's plunge to a two-year low.
Serbia's central bank started selling euros in the interbank
market to lift the dinar, but dealers said the intervention
would have to be substantial to calm the market [].
The dinar <EURRSD=> traded almost 2 percent lower on the day
at 88.857 per euro, and has lost 11.9 percent since Oct 1, the
most in the region. The country, reliant on external borrowing,
is working to cut its 2009 budget to get a safety line from the
International Monetary Fund [].
Elsewhere, a stronger dollar and falls in stocks hurt
currencies, but dealers said trade was thin.
The Polish zloty <EURPLN=> was up a notch at 3.504 per euro,
while the Hungarian forint <EURHUF=> lost 0.4 percent to 257.6
per euro by 1022 GMT.The Czech crown <EURCZK=> was down nearly 1
percent to 24.27 per euro and the Romanian leu <EURRON=> traded
0.8 percent weaker at 3.696 per euro.
The dollar rose against a basket of major currencies after
posting its biggest one-day slide in 13 years the previous day
as the outlook for a change in the U.S. ruling helped investors
become more hopeful on world's biggest economy [].
The euro is the region's main reference, and deals often
track euro/dollar moves.
Although Barack Obama's U.S. election victory could lift
spirits globally and bring in new hopes for economic
stabilisation and a touch of risk appetite, analysts said
investors will not rush into risky assets.
"(The U.S. election) implies a long-term investment
decision," said Barbara Nestor of Commerzbank in London.
"I don't see investors rushing back in building positions in
risky assets in the region ... this is a rather wait-and-see
situation and for now regional currencies are just within a
normal day volatility."
PROFIT-TAKING
European shares opened weaker as investors again turned the
focus on the economy in Europe, despite gains in Asia overnight
after the end of the long U.S. presidential campaign brought
some certainty to markets.
Regional stock markets slid 2 to 5 percent on Wednesday
after a week of strong gains.
"The big picture has not changed. The world is heading for
recession, and we'll see next year how deep it will be," a
Prague currency dealer said.
Czech data showing a narrower-than-expected foreign trade
surplus in September was a further sign of the global slowdown
hitting the Czechs' export-driven economy [].
Hungary also revised Aug trade gap down to 76.1 million euros.
Meanwhile, markets are pricing in Thursday rate cuts by the
European Central Bank and the Czech central bank, the first bank
in the region to ease policy when it cut in August.
Central European markets were on a roller-coaster last month
as the year-long financial crisis spilled over into the region,
pushing Hungary to seek aid from the International Monetary Fund
and European Union to ease concerns over its external financing.
The most volatile currency was the forint, which at one
point in October lost 15 percent of its value as investors
feared Hungary's external vulnerability, although a $25 billion
IMF/EU package brought some calm to the region.
Bond market volumes remained thin with Hungarian and Polish
bonds a touch stronger and a Polish dealer said this may
continue until the end of the year.
"Market makers are not very keen on opening new positions,
as they prefer to wait for the next year," he said.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 24.270 24.042 -0.95% +8.4%
Polish zloty <EURPLN=> 3.504 3.508 +0.11% +2.68%
Hungarian forint <EURHUF=> 257.610 256.600 -0.39% -1.88%
Croatian kuna <EURHRK=> 7.148 7.149 +0.01% +2.44%
Romanian leu <EURRON=> 3.696 3.667 -0.79% -3.23%
Serbian dinar <EURRSD=> 85.857 84.393 -1.73% -9.01%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +31 basis points to 192bps over bmk*
5-yr T-bond CZ5YT=RR +2 basis points to +156bps over bmk*
10-yr T-bond CZ9YT=RR +9 basis points to +114bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -20 basis points to +417bps over bmk*
5-yr T-bond PL5YT=RR -15 basis points to +343bps over bmk*
10-yr T-bond PL10YT=RR -14 basis points to +262bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -24 basis points to +982bps over bmk*
5-yr T-bond HU5YT=RR -33 basis points to +898bps over bmk*
10-yr T-bond HU10YT=RR +18 basis points to +622bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1122 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Marius Zaharia,
editing by Victoria Main)
