(Adds Serbian central bank intervention in paras 6-7,
refreshes prices.)
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 has been
dented by concerns over China's economic growth, falls in
Russia's foreign exchange 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 central bank sold 51 million euros in the market,
curbing a three percent loss against the euro which the
dinar<EURRSD=> posted earlier in the day.
The currency had hit an all-time low, falling past 96 to 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 Polish zloty <EURPLN=> shed 0.85 percent to trade at
4.367 against the euro at 1611 GMT.
Poland's government said that it was sticking to its goal of
joining the euro zone by 2012, despite the current economic
crisis [] but analysts said high zloty volatility
and political debate can make the road 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 0.7 percent to 27.768 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 0.48 percent to 4.332
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 284.15, 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=> 27.768 27.575 -0.7% -3.66%
Polish zloty <EURPLN=> 4.367 4.33 -0.85% -5.77%
Hungarian forint <EURHUF=> 284.15 284.38 +0.08% -7.25%
Croatian kuna <EURHRK=> 7.436 7.38 -0.75% -0.95%
Romanian leu <EURRON=> 4.332 4.311 -0.48% -7.33%
Serbian dinar <EURRSD=> 94.588 93.11 -1.56% -5.4%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +15 basis points to 118bps over bmk*
4-yr T-bond CZ4YT=RR -12 basis points to +97bps over bmk*
8-yr T-bond CZ8YT=RR -7 basis points to +98bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +6 basis points to +331bps over bmk*
5-yr T-bond PL5YT=RR +7 basis points to +287bps over bmk*
10-yr T-bond PL10YT=RR +4 basis points to +247bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -6 basis points to +760bps over bmk*
5-yr T-bond HU5YT=RR -9 basis points to +722bps over bmk*
10-yr T-bond HU10YT=RR -11 basis points to +536bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1711 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 []
Spot FX rates
Eastern Europe spot FX <EEFX=> Middle East spot FX <MEFX=>
Asia spot FX <ASIAFX=> Latin America spot FX <LATAMFX=>
Other news and reports
World central bank news [] Economic Data Guide <ECONGUIDE>
Official rates [] Emerging Diary []
Top events [] Diaries [] Diaries Index []
(Reporting by Reuters bureaus, writing by Marius Zaharia/Sandor
Peto, editing by Ian Jones)
