(Adds Serbia/IMF details, comments, dateline)
By Marius Zaharia and Jason Hovet
BUCHAREST/PRAGUE, Nov 5 (Reuters) - Central European
currencies lost ground on Wednesday and stocks gave up gains
seen in the last week, while Serbia's central bank stepped in
when the dinar hit a two-year low.
Serbia's government said this week it was in talks for a
stand-by deal with the International Monetary Fund, making it
the latest country to seek help from the international lender in
the global financial crisis.
On Wednesday, Finance Minister Diana Dragutinovic said next
year's budget should stop it needing to dip in to IMF coffers at
all and that in the worst case it would use only its special
drawing rights -- or the roughly $695 million that it deposited
with the Fund [].
But worries over the country's external financing situation
sent the dinar <EURRSD=> to a two-year low. At 1332 GMT, it
traded 1.5 percent down at 85.667 to the euro, recouping some
losses after the central bank sold 20 million euros to banks.
"It's not a problem when you see NIS (the oil monopoly)
buying euros, but we have dozens of small business clients who
hardly ask for the price. They just keep on buying," one local
dealer said.
The currency has lost 11.5 percent since Oct. 1, the most in
the region, and the Serb central bank spent around 260 million
euros in October defending its currency.
Elsewhere, currencies were hurt by falls in stocks and gains
for the dollar against the euro, the region's main reference
currency, although dealers said trade was thin.
The Polish zloty <EURPLN=> inched down a notch to 3.521 per
euro, while the Hungarian forint <EURHUF=> lost 1.2 percent to
259.62 per euro. The Czech crown <EURCZK=> fell 1.6 percent to
24.427 per euro as London banks bought euros and the Romanian
leu <EURRON=> traded 1 percent weaker at 3.7 per euro.
"I don't see investors rushing back into building positions
in risky assets in the region," said Barbara Nestor of
Commerzbank in London. "This is a rather wait-and-see
situation."
PROFIT-TAKING
After gaining initially after Barack Obama's election
victory overnight, stocks slid on Wednesday with regional
bourses down 2 to 5 percent as investors' focus moved back to
bleak growth outlooks.
"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 its August 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 ex-communist region to ease policy when it cut in August.
Central European markets roller-coastered last month as the
year-long financial crisis spilled over into the region, pushing
Hungary to seek $25 billion in aid from the International
Monetary Fund and European Union to ease concerns over its
external financing, which brought some calm to markets.
Bond market volumes remained thin Wednesday with Hungarian
and Polish bonds a touch stronger and a Polish dealer said the
quiet tone could 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=> 24.427 24.042 -1.60% +7.81%
Polish zloty <EURPLN=> 3.521 3.508 -0.37% +2.21%
Hungarian forint <EURHUF=> 259.620 256.600 -1.18% -2.68%
Croatian kuna <EURHRK=> 7.159 7.149 -0.14% +2.29%
Romanian leu <EURRON=> 3.702 3.667 -0.95% -3.4%
Serbian dinar <EURRSD=> 85.667 84.393 -1.51% -8.77%
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 currency data taken from Reuters at 1432 CET.
All bond 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/Jason
Hovet, editing by Patrick Graham)
