* Fx, stocks, bonds fall on renewed euro zone worries
* Romanian stocks nosedive 11 pct on strike concerns
* Polish cbank keeps rates on hold
(Recasts with new prices, comments)
By Dagmara Leszkowicz and Sandor Peto
WARSAW/BUDAPEST, May 25 (Reuters) - Central European assets
fell on Tuesday as risk aversion grew globally and markets in
the neighbouring euro zone got an additional hit from fears that
the debt crisis in its southern peripheries was widening.
Romania's stock index <> was worst hit, plunging 11
percent due to concern about looming strikes against drastic
budget cuts agreed with the IMF. []
Central Europe's reference currency, the euro <EUR=>,
touched a four-year trough against the dollar after Spain's
weekend takeover of a small savings bank and political tension
on the Korean peninsula added to global risk aversion.
[]
The region's main equity indices, excluding Romania, fell
2.4-5.2 percent to about three-month lows.
Elsewhere, Bulgarian credit default swaps rose 25 basis
points to 280 as the country said its budget deficit could be
4.8 percent of gross domestic product in 2010, far above initial
estimates. []
While the strong presence of Greek banks make Romania and
Bulgaria more vulnerable to the euro zone crisis than other
emerging economies in the European Union, deficit and debt
levels in central Europe are healthier than in many euro zone
countries.
However, the region is heavily reliant on exports to western
Europe, and its assets are vulnerable to risk aversion.
Currency losses were led by the region's most liquid unit,
the zloty <EURPLN=>, which fell 1.7 percent against the euro by
1502 GMT. Hungary's forint <EURHUF=> shed 0.9 percent, while the
Czech crown <EURCZK=> was down 0.4 percent and Romania's leu
<EURRON=> dipped 0.2 percent.
Analysts said nervousness over Romania's political situation
was better reflected in stocks as the leu may be protected by
the central bank if it weakens markedly.
Serbia's dinar <EURRSD=> hit record lows and it was bid at
102.51, slightly off lows at 103.37. Serbia's central bank has
sold 856.5 million euros this year to support the currency,
including its latest 20 million euro sale on
Monday.[]
POLAND HOLDS RATES
Hungarian government bond yield spreads over corresponding
Bund yields rose 19-26 basis points, Polish yields rose 13-18
basis points, while Czech yields rose 10-14 basis points. Bond
prices at the long end of the curve suffered mostly.
Poland's central bank kept its key interest rate
<PLINTR=ECI> on hold at a record low 3.5 percent. It said
inflation was likely to ease in coming months. []
The bank's statement had little comment on the zloty's
retreat after strong gains earlier this year, although the
minutes of the bank's April meeting showed that rate setters
paid significant attention to the zloty.
Rate setter Jan Wijniecki said the weakening zloty was
beneficial to the economy. []
Some Budapest-based dealers said central banks in the region
might intervene in the market if the current turmoil continues.
Hungary's central bank never comments on market intervention,
and dealers said the bank was unlikely to cut rates further at a
meeting on Monday.
Current forint levels against the euro and the Swiss franc
are already painful to Hungarian households who hold a large
amount of foreign currency loans.
"Even without central bank intervention, market players have
become very cautious (in the region)," one currency dealer said.
"There have been big swings in both directions and many people
have burnt themselves."
"If there are even bigger falls in developed equity markets,
let's say about 10 percent, the forint may try to settle in
weaker territories at 285-290 (from around 280)," the dealer
said.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.638 25.526 -0.44% +2.65%
Polish zloty <EURPLN=> 4.169 4.099 -1.68% -1.56%
Hungarian forint <EURHUF=> 280.14 277.67 -0.88% -3.49%
Croatian kuna <EURHRK=> 7.27 7.269 -0.01% +0.54%
Romanian leu <EURRON=> 4.183 4.175 -0.19% +1.3%
Serbian dinar <EURRSD=> 102.51 102.41 -0.1% -6.47%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +10 basis points to 134bps over bmk*
7-yr T-bond CZ7YT=RR +14 basis points to +150bps over bmk*
10-yr T-bond CZ9YT=RR +14 basis points to +145bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +13 basis points to +421bps over bmk*
5-yr T-bond PL5YT=RR +18 basis points to +400bps over bmk*
10-yr T-bond PL10YT=RR +16 basis points to +333bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +19 basis points to +593bps over bmk*
5-yr T-bond HU5YT=RR +22 basis points to +559bps over bmk*
10-yr T-bond HU10YT=RR +26 basis points to +483bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1702 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 Dagmara
Leszkowicz/Sandor Peto; Editing by Susan Fenton)
