(updates, adds Serb rate cut, bond data)
By Sandor Peto and Marius Zaharia
BUDAPEST/BUCHAREST, Jan 22 (Reuters) - Central European
currencies gave up earlier gains to ease on Thursday as risk
aversion rose again on global markets, while Serbia's central
bank continued the region's string of rate cuts.
Global stocks markets fell, European government bonds yields
dropped, the yen and the dollar strengthened and investors sold
assets in emerging markets despite an early rally.
"The positive sentiment which we saw in the morning
disappeared, the zloty and the Turkish lira weakened again and
the forint also retreated," one Budapest-based dealer said.
Sentiment in the broader emerging market universe is dented
by concerns over China's economic growth, falls in Russia's
forex reserves and political unrest in Iceland.
In Central Europe, continuing central bank rate cuts also
weighed on currencies as concerns mounted over economic growth.
Serbia's dinar <EURRSD=> hit an all-time low against the
euro, falling past 96 against the euro after the central bank
chopped a bigger-than-expected 125 basis points off its
benchmark policy rate, the two-week repo <RS2WTS=NBYA>, to 16.50
percent.[]]
"The central bank did not intervene today," one trader said.
"We are currently pricing the dinar close to 97.00 to the euro,
but there are no deals yet at those levels."
The Polish zloty<EURPLN=> shed 0.89 percent to trade at
4.369 percent at 1448 GMT.
Poland's government said that it was sticking to its goal to
join the euro zone by 2012, despite the current economic crisis
[] but analysts said high zloty volatility and
political debates can make the road to the euro rocky
[].
A Reuters poll showed that analysts expect Poland and other
countries in the region to adopt the euro only in
2013.[]
Poland also priced a five-year bond issue worth one billion
euros on Thursday and became the first eastern European
sovereign to launch a eurobond this year.[]
The Czech crown<EURCZK=> eased 0.86 percent to 27.815 per
euro, slipping along with regional peers, and dealers said it
could ease further in the days ahead.
"The market is getting longer EUR/CZK but it could take some
time to find a top level," one dealer said. "The Czech economy
is weakening and weakening and weakening."
The trader said comments from the central bank vice-governor
on Wednesday -- that crown weakness could limit the scope for
interest rate cuts -- made it less likely the bank will move too
drastically on monetary policy at a meeting in
February.[].
"I don't think they will go aggressively lower with rates,"
the dealer said, adding 50 basis points was likely but also
maybe 25 basis points.
The Romanian leu<EURRON=> eased by 0.6 percent to 4.337
against the euro, getting close again to the record low of 4.353
touched last week.
"U.S. jobless claims and housing data turned things around,"
one dealer said. []
Hungary's forint<EURHUF=> traded around 284.10, firmer by
0.1 percent from Wednesday, but giving up almost all the ground
gained in the morning, and Hungarian government bonds also
retreated.
"The last working day of the week can be shaky now, but who
knows, the market is so jittery that it (the forint) might even
firm tomorrow," one dealer said.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 27.815 27.575 -0.86% -3.82%
Polish zloty <EURPLN=> 4.369 4.33 -0.89% -5.81%
Hungarian forint <EURHUF=> 284.1 284.38 +0.1% -7.23%
Croatian kuna <EURHRK=> 7.435 7.38 -0.74% -0.94%
Romanian leu <EURRON=> 4.337 4.311 -0.6% -7.44%
Serbian dinar <EURRSD=> 95.07 93.11 -2.06% -5.88%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +22 basis points to 125bps over bmk*
4-yr T-bond CZ4YT=RR -12 basis points to +97bps over bmk*
8-yr T-bond CZ8YT=RR -4 basis points to +101bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +9 basis points to +334bps over bmk*
5-yr T-bond PL5YT=RR +15 basis points to +294bps over bmk*
10-yr T-bond PL10YT=RR +11 basis points to +254bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +1 basis points to +767bps over bmk*
5-yr T-bond HU5YT=RR -1 basis points to +729bps over bmk*
10-yr T-bond HU10YT=RR -4 basis points to +543bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1548 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
For related news and prices, click on the codes in brackets:
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(Reporting by Reuters bureaus, writing by Marius Zaharia/Sandor
Peto, editing by Ian Jones)
