(Reacsst with new prices, comments.)
By Marius Zaharia and Sandor Peto
BUDAPEST/BUCHAREST, Jan 16 (Reuters) - Central European
currencies trimmed early gains late on Friday as a surge in
appetite for risk on global markets subsided and investors eyed
further cuts in interest rates across the region.
In late trade, the Czech crown<EURCZK=> and the Polish
zloty<EURPLN=> had gained just 0.1 percent to the euro, trimming
gains of 1 percent or more. The forint<EURHUF=> was up 0.3
percent and Romanian leu<EURRON=> 0.2 percent.
Dealers said markets had soared in morning trade due to a
dive in risk aversion on global markets on the details of a
fresh stimulus package in the U.S. and bailout of Bank of
America Corp.
But huge losses reported by U.S. banks later on Friday
[] dented sentiment, prompting a turnaround.
"The release of results from Bank of America and Citigroup
in the afternoon erased some of the enthusiasm in the market,"
Piraeus Bank said in a research note.
It added that the leu had also been hurt by the absence of
central bank intervention -- of which some signs had been seen
earlier in the week.
A string of economic figures released this year has
confirmed that inflation is falling as the global recession hits
exports and growth across Central Europe, putting pressure on
central banks to cut rates.
Hungary's central bank is seen curbing its base rate by
another 50 basis point to 9.5 percent on Monday despite some
weakening of the forint [], and those expectations
lifted its bonds, lowering yields by about 20 basis points.
"There were buyers from both home and abroad... this is
perhaps the first day this year when we saw real flows," one
Budapest-based fixed income trader said.
"To me the market looks fragile," one currency dealer added.
"The whole international market sentiment is uncertain."
The Czech central bank is also expected to cut its interest
rates next month as economic growth is seen slowing down
drastically [].
"I think the market can imagine a 75 point basis cut in
February," a Prague bond dealer said.
Romania is also seen joining the rate-cutting trend next
month with 25-50 basis points, while Poland is seen slashing
another 50 basis points off its key rate this month.
---------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 27.328 27.301 -0.1% -2.1%
Polish zloty <EURPLN=> 4.204 4.208 +0.1% -2.12%
Hungarian forint <EURHUF=> 278.45 279.25 +0.29% -5.35%
Croatian kuna <EURHRK=> 7.379 7.36 -0.26% -0.19%
Romanian leu <EURRON=> 4.283 4.29 +0.16% -6.27%
Serbian dinar <EURRSD=> 93 93.33 +0.35% -3.78%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +1 basis points to 119bps over bmk*
4-yr T-bond CZ4YT=RR -11 basis points to +109bps over bmk*
8-yr T-bond CZ8YT=RR +2 basis points to +113bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +4 basis points to +754bps over bmk*
5-yr T-bond HU5YT=RR +7 basis points to +717bps over bmk*
10-yr T-bond HU10YT=RR +10 basis points to +565bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1551 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/Sandor
Peto, Editing by Patrick Graham)
