* Romanian cbank delivers expected 50 basis point rate cut
* Leu gains, Romanian cbank seen intervening in support
* Zloty slides, cbank warns of debt rising past legal limit
* Moody's says may revise Hungary's negative rating outlook
(Recasts throughout)
By Marton Dunai
BUDAPEST, Sept 29 (Reuters) - The Romanian leu <EURRON=>
turned early losses into gains, adding 0.4 percent on the day
after the central bank delivered the expected 50 basis point
rate cut to bring rates to 8.0 percent on Tuesday morning.
Other Eastern European currencies showed a mixed picture,
with the zloty sliding but others gaining.
Dealers in Bucharest said the central bank was intervening
for a second day in a row this week, to counter weakening
pressure from the rate cut and political instability.
"The central bank is intervening through commercial banks,
they probably sold another 200 million euros," one
Bucharest-based dealer said.
Dealers speculate this adds to another 200-300 million it
may have sold on Monday. They estimate it sold another 300-400
million euros last week and at least 4.5 billion euros since the
Lehman Brothers collapse a year ago.
The zloty shed 0.5 percent at 0939 GMT after the Warsaw
central bank said in a report that the country's debt could top
the constitutional limit of 55 percent of gross domestic product
and approach 60 percent next year. []
"One big flow went through the market," said one
Warsaw-based dealer. "It is possible that it was a reaction on
the central bank's report about the deficit."
The Hungarian forint <EURHUF=> was stable after Moody's said
in a report it might change Hungary's negative rating outlook if
the country continues fiscal consolidation. []
The Czech crown <EURCZK=>, usually seen as a safe haven in
the region, was 0.1 percent stronger after a Monday holiday.
"We have seen some glimpses of a correction on equity
markets which could become a negative factor, but the crown is
less sensitive to this," said Michal Brozka, an analyst at
Raiffeisen Bank in Prague adding the bank still expects the
crown to end the year on a weaker note at around 26 to the euro.
Regional equity markets were also mixed, with Prague's PX
adding 1.0 percent at 0942 GMT, while Warsaw's WIG index was
down 0.4 percent and Budapest's BUX shedding 0.2 percent.
Bond markets regionwide remained very quiet, dealers said.
STABILITY EYED
News about stability in the region's countries remained on
investors' radars.
The leftist grouping in Romania's two-party ruling coalition
threatened on Monday to leave the government if the president
endorsed the prime minister's decision to sack a key minister,
igniting worries over stability in Bucharest. []
"The last thing that Romania needs at this stage is
political noise," said Simon Quijano-Evans, EME economist and
strategist at Cheuvreux. "Especially since it is pretty much
depending on IMF/EU financing."
The departure of the left wing could deal a blow to the
government in Bucharest.
"If the leftist PSD leaves government today it should matter
a lot," a dealer in Bucharest said.
In Lithuania, troubles continued as Moody's cut the
country's ratings for the second time this year and warned of
the deep recession's pressures on government finances in the
Baltic nation. [].
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.185 25.205 +0.08% +6.23%
Polish zloty <EURPLN=> 4.212 4.19 -0.52% -2.3%
Hungarian forint <EURHUF=> 269.2 269.27 +0.03% -2.1%
Croatian kuna <EURHRK=> 7.262 7.269 +0.1% +1.42%
Romanian leu <EURRON=> 4.183 4.2 +0.41% -4.03%
Serbian dinar <EURRSD=> 92.47 92.67 +0.22% -3.23%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -2 basis points to +165bps over bmk*
7-yr T-bond CZ7YT=RR -4 basis points to +180bps over bmk*
10-yr T-bond CZ10YT=RR -1 basis points to +176bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR 0 basis points to +387bps over bmk*
5-yr T-bond PL5YT=RR 0 basis points to +331bps over bmk*
10-yr T-bond PL10YT=RR -1 basis points to +291bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -2 basis points to +555bps over bmk*
5-yr T-bond HU5YT=RR 0 basis points to +513bps over bmk*
10-yr T-bond HU10YT=RR -1 basis points to +447bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1139 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
(Reporting by Marton Dunai; editing by Stephen Nisbet and Andy
Bruce)
