(Repeats story published late on Wednesday)
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
hit the dinar <EURRSD=>. By 1613 GMT, it traded 1.5 percent down
at 85.64 to the euro, recouping some losses after the central
bank sold a total 30 million euros to banks during the day.
"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 11.6 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
earlier gains for the dollar against the euro, the region's main
reference currency, although dealers said trade was thin.
The region's emerging markets saw a broad sell-off last
month due to a collapse in global risk appetite, which has
recovered somewhat in the last week.
On Wednesday, the Polish zloty <EURPLN=> ended flat at 3.51
per euro, while the Hungarian forint <EURHUF=> lost 0.2 percent
to 257.15 per euro. The Czech crown <EURCZK=> fell 1.4 percent
to 24.378 per euro as London banks bought euros and the Romanian
leu <EURRON=> traded 0.4 percent weaker at 3.682 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 rather a wait-and-see
situation."
PROFIT-TAKING
After gaining initially after Barack Obama's U.S. election
victory overnight, stocks slid on Wednesday with regional
bourses losing 2 to 4 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 showed a narrower-than-expected foreign trade
surplus in September, another sign of the global slowdown
hitting the Czechs' export-driven economy [].
Hungary 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.
Polish bonds strengthened, while Hungary's extended the
week's gains following steep price falls in October.
"Yields dropped significantly and there were some deals,
too," one Budapest trader said, adding it would take some more
time to have a "continuous market" after markets froze up last
month as investors dumped Hungarian assets en masse.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 24.378 24.042 -1.40% +8.00%
Polish zloty <EURPLN=> 3.507 3.508 +0.03% +2.60%
Hungarian forint <EURHUF=> 257.150 256.600 -0.21% -1.70%
Croatian kuna <EURHRK=> 7.135 7.149 +0.20% +2.61%
Romanian leu <EURRON=> 3.682 3.667 -0.41% -2.84%
Serbian dinar <EURRSD=> 85.640 84.393 -1.48% -8.74%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +7 basis points to 169bps over bmk*
5-yr T-bond CZ5YT=RR +3 basis points to +157bps over bmk*
10-yr T-bond CZ9YT=RR +10 basis points to +116bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -34 basis points to +403bps over bmk*
5-yr T-bond PL5YT=RR -12 basis points to +346bps over bmk*
10-yr T-bond PL10YT=RR -9 basis points to +267bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -66 basis points to +940bps over bmk*
5-yr T-bond HU5YT=RR -73 basis points to +858bps over bmk*
10-yr T-bond HU10YT=RR -70 basis points to +534bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1713 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)
