(Updates prices throughout)
PRAGUE, Oct 7 (Reuters) - Romania's leu and Hungary's forint
handed back early gains on Tuesday, leading a pullback in
emerging Central Europe as sentiment soured over the health of
the global financial sector and regional stocks slid.
The forint <EURHUF=> fell back to flat at 250.5 per euro
after gaining one percent against the previous close in early
trade. The leu <EURRON=> was up 0.7 percent to 3.394 versus the
euro at 0828 GMT, falling back from a 1.3 percent gain.
Investors have raised red flags around Romania and Hungary
due to heavy exposure to foreign currency debt and Romania's
wide external deficit. Its currency lost more than 2 percent on
Monday and dealers said it looked like the Romanian central bank
had intervened indirectly on Monday to prop up the leu.
Global markets, hit by a widening financial crisis and
economic slowdown fears, got a shot of optimism from a surprise
1 percentage point interest rate cut in Australia overnight.
But fragile sentiment shattered as concerns grew over the
health of financial groups, with Royal Bank of Scotland <RBS.L>
shedding almost 40 percent in London.
"Currencies are coming under pressure again," a Prague
trader said. "It's the same story: Panic coming from the
financial crisis, and stocks are going down."
Central European stock markets lost around 2 percent in
early trade with Prague dropping 5.5 percent.
In Serbia, where the central bank sold euros in the market
on Monday to lift the currency, the dinar <EURRSD=> lost almost
1 percent on the back of strong foreign demand for euros.
At 0828 GMT, the dinar was down 0.7 percent at 78.87 per
euro.
"The situation out there must be very desperate, if they
need to close their dinar positions," a senior dealer said.
The Polish zloty <EURPLN=> gave up gains to inch down to
3.46 per euro and the Czech crown <EURCZK=>, which has held up
better due to corporate hedging, was steady at 24.765 per euro.
Warsaw's blue chip stocks index lost 1 percent while
Prague's PX index fell as much as 5.5 percent.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 24.765 24.775 +0.04% +6.54%
Polish zloty <EURPLN=> 3.460 3.459 -0.03% +3.9%
Hungarian forint <EURHUF=> 250.500 250.400 -0.04% +0.93%
Croatian kuna <EURHRK=> 7.124 7.121 -0.04% +2.76%
Romanian leu <EURRON=> 3.944 3.970 +0.65% -10.16%
Serbian dinar <EURRSD=> 79.868 79.348 -0.66% -1.41%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +3 basis points to 45bps over bmk*
5-yr T-bond CZ5YT=RR +3 basis points to +31bps over bmk*
10-yr T-bond CZ9YT=RR +4 basis points to +36bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +2 basis points to +304bps over bmk*
5-yr T-bond PL5YT=RR +3 basis points to +260bps over bmk*
10-yr T-bond PL10YT=RR +4 basis points to +210bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -16 basis points to +678bps over bmk*
5-yr T-bond HU5YT=RR -27 basis points to +632bps over bmk*
10-yr T-bond HU10YT=RR -19 basis points to +477bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1028 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
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(Reporting by Reuters bureaux, writing by Jason Hovet; editing
by Patrick Graham)
