* Polish zloty leads losses as euro chances receding
* Investors worried about swine flu
* Czech Republic plans long 5-year euro bond
(Updates prices, adds euro poll)
By Jason Hovet and Marius Zaharia
PRAGUE/BUCHAREST, April 28 (Reuters) - The Polish zloty led
emerging European currencies lower on Tuesday due to fresh
doubts over the country's euro entry plans, while investors
shunned risk on worries over the global swine flu outbreak.
Investors stayed cautious as governments around the world
took steps to mitigate the spread of a flu virus that has killed
up to 149 in Mexico, and has shown up in the United States,
Canada and Europe. []
An outbreak threatened to add to a global slowdown, hitting
central Europe's export-driven economies, which have already
buckled under a drop in demand for their cars, televisions and
other goods in the West.
In Poland, following a higher than forecast 2008 budget
deficit, the government approved an updated euro plan without
revising its 2012 target date, but conceded that a sharp
economic downturn may hamper it. [] []
"The investors have understood that it's no rose garden down
here," said a Warsaw-based trader. "It now seems we don't meet
... Maastricht criteria and one can see that ERM2 entry won't
come now but in some time."
The zloty <EURPLN=> fell 0.74 percent from Monday's domestic
close, bidding at 4.566 to the euro by 1050 GMT. The Hungarian
forint <EURHUF=> was 0.66 percent weaker to 296.75 per euro and
the Czech crown <EURCZK=> dropped 0.5 percent to 26.797.
The zloty, down nearly 30 percent from its all-time highs
against the euro last summer, lost 2 percent on Monday on a mix
of fading euro hopes and signs of Poland's deepening slowdown,
as shown by the retail sales and jobless data. []
HARD TO JOIN
A Reuters poll showed on Tuesday a volatile zloty and a
stubborn budget gap will likely delay Poland's euro zone entry
by a year. []
The Czech Republic, Hungary and Latvia, whose governments
have all collapsed this year, are not expected to join until
2014, a year later than the last poll's forecast. Romania and
Bulgaria were seen joining only in 2015, unchanged from last
time.
Analysts expect nearly all of the region's economies to
slide into recession this year due to falling demand for their
goods from western markets. On top of this, investors fear a
swine flu outbreak can prolong pain by hitting tourism, farmers
and insurers.
"Swine flu fears dent confidence," UniCredit analysts said
in a morning note. "Until there is more clarity, markets will
continue to focus on swine flu newsflow."
In Hungary, the three-month rolling unemployment rate rose
to 9.7 percent in January-March from 9.1 percent in
December-February. []
In Romania, which expects a first tranche of IMF-led
financial aid next month, the leu <EURRON=> weakened by 0.6
percent at 4.233 per euro.
In debt markets, Polish bonds remained virtually flat, while
the Czech Republic launched the sale of a 5.5 year euro
benchmark bond on Tuesday.Hungary sold 40 billion forints worth
of three-month T-bills. [] []
Sentiment for central European debt has improved since March
due to rebounding global stocks and International Monetary Fund
pledges to make emerging market funds available.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.797 26.666 -0.49% -0.16%
Polish zloty <EURPLN=> 4.566 4.532 -0.74% -9.88%
Hungarian forint <EURHUF=> 296.75 294.78 -0.66% -11.19%
Croatian kuna <EURHRK=> 7.438 7.435 -0.04% -0.98%
Romanian leu <EURRON=> 4.233 4.208 -0.59% -5.16%
Serbian dinar <EURRSD=> 95.64 95.53 -0.12% -6.14%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -2 basis points to 183bps over bmk*
4-yr T-bond CZ4YT=RR +9 basis points to +207bps over bmk*
8-yr T-bond CZ8YT=RR +5 basis points to +299bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +8 basis points to +417bps over bmk*
5-yr T-bond PL5YT=RR +4 basis points to +351bps over bmk*
10-yr T-bond PL10YT=RR +3 basis points to +307bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +35 basis points to +904bps over bmk*
5-yr T-bond HU5YT=RR +34 basis points to +851bps over bmk*
10-yr T-bond HU10YT=RR +35 basis points to +758bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1350 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus; writing by Jason Hovet/Marius
Zaharia; editing by Stephen Nisbet)
