* Zloty leads recovery on euro rise, periphery worries ease
* Stocks gains for second day, bonds stable
(Updates prices, adds bonds, background)
By Jason Hovet
PRAGUE, Feb 9 (Reuters) - The Polish zloty led a recovery in
central European currencies on Tuesday, lifted by a rebound for
the euro as speculation of a rescue for Greece grew and relieved
some pressure on the region.
Concerns over growing deficits in the euro zone's periphery
have hit emerging Europe's markets in the last week, and
analysts said the region would struggle to resume the gains seen
at the start of year until those fears subsided.
The zloty, which had led a rise in the region to start the
year before reversing from a 13-month high last week, rose 0.4
percent over the previous close to bid at 4.074 to the euro by
1010 GMT. It was up over half a percent against overnight lows.
The euro is the region's reference currency, and typically
tracks moves in the euro/dollar. []
"The eurodollar has rebounded in the morning which bodes
well for the zloty as recently, because of the lack of key
macroeconomic data, it heavily weighs on the zloty," said Michal
Karewicz, FX analyst at Citibank Handlowy in Warsaw.
Analysts have said that while central European battles its
own fiscal problems, the region is better placed than euro zone
countries like Greece, Spain or Portugal.
But the economic crisis has knocked plans for quick euro
adoption in the EU's eastern wing. Poland and the Czech Republic
approved convergence plans on Monday that looked set to delay
adoption until the second half of next decade. []
STOCK VOLATILITY
Stocks in the region have mostly corrected from rises of as
much as 10 percent in January. They are now mostly flat or down
since Jan 1, with Warsaw's blue-chip index <> almost 7
percent off near November lows.
On Tuesday, indices rose for a second straight session, led
by Prague's <> gain of 2 percent.
"This morning's regional FX moves, with the PLN leading the
way ... are the positive signs we continue to see supporting the
regional equity story," Cheuvreux analyst Simon Quijano-Evans
said in a client note.
"Indeed, the PLN move is possibly related to some
privatisation project, with prospective investors likely buying
into weaker intra-day levels."
On Monday, Poland set the price range for the sale of a 16
percent stake in utility Enea <ENAE.WA> to earn as much as 1.24
billion zlotys as part of a privatisation push. []
In other trade, the Czech crown <EURCZK=> rose 0.1 percent
from Monday's domestic close, and bond yields dropped. January
annual inflation was a touch lower than expected, data showed on
Tuesday, signalling interest rates would likely stay at record
lows into the second half of the year. []
The Romanian leu <EURRON=> was up 0.2 percent and Hungary's
forint <EURHUF=> gained 0.3 percent after trade data from last
year showed the balance swung to a surplus. []
The forint rise steadied government bond prices. The
Hungarian yield curve has steepened on rate cut expectations.
Polish bonds were quiet before a 2-year bond tender.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 26.139 26.167 +0.11% +0.68%
Polish zloty <EURPLN=> 4.074 4.092 +0.44% +0.74%
Hungarian forint <EURHUF=> 272.22 272.99 +0.28% -0.69%
Croatian kuna <EURHRK=> 7.322 7.319 -0.04% -0.17%
Romanian leu <EURRON=> 4.128 4.134 +0.15% +2.65%
Serbian dinar <EURRSD=> 98.82 98.84 +0.02% -2.98%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -2 basis points to 111bps over bmk*
7-yr T-bond CZ7YT=RR -13 basis points to +144bps over bmk*
10-yr T-bond CZ10YT=RR -4 basis points to +136bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -2 basis points to +396bps over bmk*
5-yr T-bond PL5YT=RR -2 basis points to +334bps over bmk*
10-yr T-bond PL10YT=RR -2 basis points to +299bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -3 basis points to +564bps over bmk*
5-yr T-bond HU5YT=RR -2 basis points to +529bps over bmk*
10-yr T-bond HU10YT=RR -3 basis points to +479bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1112 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet; Editing
by Andy Bruce)
