(Updates throughout, new dateline)
BUDAPEST, Sept 15 (Reuters) - Central European currencies
and bonds eased on Monday, hit by concerns over global financial
markets after Lehman Brothers filed for bankruptcy, as well as
signs Poland may retreat from a euro entry target of 2011.
Hungary's forint led with a 1.3 percent drop as a domestic
political row aggravated losses, while the zloty fell 0.6
percent after a senior government source said Poland is likely
to join the euro in 2012 and not 2011 as it said last week.
Romania's leu also fell 0.4 percent.
"I think there were two factors in play today, one of which
was regional and the other was global," a dealer said.
"In the region, there was news that Poland's 2011 euro
target figure was more likely to be 2012 while globally, Lehman
and Merrill weighed on everything."
Investment bank Lehman Brothers filed for bankruptcy
protection in what is set to be the most high profile case of
its type since 1990, while Bank of America announced it would
buy brokerage Merrill Lynch.
On Monday, the Czech Finance Ministry announced plans to
scale back fourth quarter bond issues due to market volatility,
with dealers citing widening asset swap spreads as the main
culprit.
But dealers said that the region was somewhat insulated by
the dollar's early fall -- dollar weakness usually benefits
emerging European assets.
In Hungary, parliament prepared to vote on dissolution and
dealers said that the political waves made Hungary less
attractive, despite expectations the opposition motion would
fail.
"Looking around the market, I only see pessimism and there's
just no reason investors would buy into riskier emerging market
assets now, so we're heading for more weakening," a dealer said.
"It's going to be gradual as last week's volatility knocked
short positions out and without such positions, volatility is
going to be much less."
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 24.194 24.203 +0.04% +8.70%
Polish zloty <EURPLN=> 3.362 3.342 -0.60% +6.62%
Hungarian forint <EURHUF=> 241.400 238.580 -1.29% +4.43%
Croatian kuna <EURHRK=> 7.106 7.103 -0.04% +3.01%
Romanian leu <EURRON=> 3.617 3.603 -0.39% -1.08%
Serbian dinar <EURRSD=> 76.100 76.290 +0.25% +3.38%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +19 basis points to +17bps over bmk*
5-yr T-bond CZ5YT=RR +17 basis points to +16bps over bmk*
10-yr T-bond CZ9YT=RR +11 basis points to +30bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +24 basis points to +263bps over bmk*
5-yr T-bond PL5YT=RR +24 basis points to +236bps over bmk*
10-yr T-bond PL10YT=RR +19 basis points to +204bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +24 basis points to +535bps over bmk*
5-yr T-bond HU5YT=RR +21 basis points to +508bps over bmk*
10-yr T-bond HU10YT=RR +17 basis points to +414bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1545 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
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(Reporting by Reuters bureaus, writing by Balazs Koranyi;
editing by Patrick Graham)
