(Changes dateline, new throughout)
BUDAPEST, Sept 30 (Reuters) - Central European currencies
pared losses on Tuesday as global markets rebounded from falls
caused by U.S. lawmakers' shock rejection of a rescue plan for
financial markets late on Monday.
The Polish zloty <EURPLN=> and the Czech crown <EURCZK=>
more than halved earlier losses against the euro late on, while
Hungary's forint <EURHUF=D2> had fully recovered.
The region's main stock exchanges also at least partially
recovered from their deep losses as an early flight of funds
into safer assets eased, at least temporarily. Equities in
developed markets including the U.S. also rebounded.
The forint traded at 242.61 to the euro at 1518 GMT, flat
from Monday. The zloty shed 0.33 percent to trade at 3.391 to
the euro, while the Czech crown eased 0.42 percent to 24.65.
"It felt like the sky was the limit (in the morning)... but
we finally found resistance. Now the crown is treading water,"
one dealer in Prague said.
Central European currency dealers said earlier concerns had
given way to hope that the United States administration will
finally push through a bailout plan for the troubled financial
sector.
But global market jitters are not over and investors still
fear that liquidity problems take further preys in the financial
sector in the United States or Europe, dealers said.
"It has been a surprise how well the forint the weathered
the storm, but I think there will be weakening, it is not over,"
one Budapest-based currency dealer said.
"The problems have reached Europe and if a German, French or
Belgian bank will face difficulties, that can already have a
direct impact on the (central European) region."
The region's government bonds moved mostly sideways, except
for Hungary, which extended recent losses. Polish bonds were
little moved, and traders said markets would watch developments
in the U.S. which may overshadow finance ministry inflation
forecast due on Wednesday.
Dealers and officials said the global financial turmoil has
had little impact on the region so far as Central European banks
were mostly unexposed to the toxic debt with which U.S. and
European financial houses are struggling.
Central banks which met in the region in the past week kept
interest rates on hold, and Hungary's central bank pledged
increased prudency in rate decisions, saying that the global
jitters required caution.
Meanwhile, Hungary's financial market watchdog PSZAF
tightened rules on short-selling in the Budapest bourse.
Hungary's <> equity index recovered from early falls and
ended firmer by 0.83 percent. Warsaw's <> and Prague's
<> also rebounded, and were firmer by 2.14 percent and lower
by 0.07 percent, respectively.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 24.650 24.548 -0.42% +6.97%
Polish zloty <EURPLN=> 3.391 3.380 -0.33% +5.82%
Hungarian forint <EURHUF=> 242.610 242.550 -0.02% +4.05%
Croatian kuna <EURHRK=> 7.100 7.104 +0.06% +3.09%
Romanian leu <EURRON=> 3.746 3.704 -1.13% -4.63%
Serbian dinar <EURRSD=> 76.798 76.528 -0.35% +2.49%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -7 basis points to 23bps over bmk*
5-yr T-bond CZ5YT=RR -9 basis points to +18bps over bmk*
10-yr T-bond CZ9YT=RR -5 basis points to +32bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -8 basis points to +274bps over bmk*
5-yr T-bond PL5YT=RR -9 basis points to +222bps over bmk*
10-yr T-bond PL10YT=RR -4 basis points to +183bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +2 basis points to +608bps over bmk*
5-yr T-bond HU5YT=RR +14 basis points to +557bps over bmk*
10-yr T-bond HU10YT=RR 0 basis points to +413bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1620 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
(Reporting by Reuters bureaus, writing by Sandor Peto;
editing by Patrick Graham)
