* FX trim losses, zloty briefly touched 3-mth low
* Poland to hold bond tender at 1000 GMT
* Possible tax hikes push Romania's stocks down
(Adds Polish deputy finmin, fixed income, background)
WARSAW, May 5 (Reuters) - The Polish zloty, emerging
Europe's most liquid currency, briefly touched 3-month lows on
Wednesday after growing risk aversion sparked by the euro zone's
worsening debt woes prompted investors to move funds to safer
havens.
The zloty has led losses among CEE currencies over the past
month, shedding more than 4 percent against the euro amid
concerns that Greece's debt problems could spill over into other
peripheral euro zone states.
"It's all about risk aversion. The market reacts now on
rumours and speculation and as long as this continues, regional
units will remain under huge pressure," said Lutz Karpowitz, an
FX strategist at Commerzbank in Frankfurt. "But the recent
selloff is overdone."
By 0923 GMT the zloty <EURPLN=> was down 0.5 percent against
the euro, slightly off its previous lows.
Polish Deputy Finance Minister Dominik Radziwill
acknowledged the impact of the Greek turmoil on the zloty and on
bonds but said it should be temporary. []
Other currencies were less affected, with Hungary's forint
<EURHUF=> and the Czech crown <EURCZK=> each up some 0.1 percent
to the euro.
Stocks in the region were also in the red, with Bucharest's
BETI <> falling almost 2.9 percent
Dealers in Bucharest said reports that Romania's government
may be considering raising taxes to meet conditions of an
IMF-led aid package knocked the country's stock indices.
[]
Bonds market tracked the regional trend, with Hungary's
10-year paper hitting 7 percent. In Poland investors were
awaiting a 2-year bond tender, with results expected at 1000
GMT.
A finance ministry official said the tender would take place
despite the current financial turmoil.
"We gave a big supply spread, and there's considerable
over-liquidity in the market, which gives us the possibility of
a flexible reaction," Piotr Marczak, head of the ministry's debt
department, told Reuters.
LOCAL FACTORS NOT IMPACTING
Analysts said local factors currently had no impact on the
market and that the region's currencies would remain vulnerable
so long as worries over possible contagion from Greece to other
euro zone members persisted.
On the domestic front, the Czech central bank is expected to
adopt a wait-and-see approach at Thursday's policy meeting.
Analysts are split over whether the central bank will cut rates
one more time after recent dovish comments.
"The (crown's) strengthening path seems to have been broken
by lower risk appetite, at least for the moment, and the central
bank's stance will certainly be influenced by the risks
development," Komercni Banka dealers said in a morning note.
"Moreover, our analysis of the forecast model shows that the
outcome will not point to a cut, but rather keep pointing to
rates being gradually raised later on the monetary policy
horizon."
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.807 25.827 +0.08% +1.98%
Polish zloty <EURPLN=> 4.015 3.996 -0.47% +2.22%
Hungarian forint <EURHUF=> 275.67 275.92 +0.09% -1.93%
Croatian kuna <EURHRK=> 7.252 7.252 0% +0.79%
Romanian leu <EURRON=> 4.148 4.144 -0.1% +2.16%
Serbian dinar <EURRSD=> 99.13 98.91 -0.22% -3.28%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +16 basis points to 99bps over bmk*
7-yr T-bond CZ7YT=RR +9 basis points to +95bps over bmk*
10-yr T-bond CZ9YT=RR +11 basis points to +96bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +13 basis points to +398bps over bmk*
5-yr T-bond PL5YT=RR +16 basis points to +344bps over bmk*
10-yr T-bond PL10YT=RR +15 basis points to +280bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +48 basis points to +495bps over bmk*
5-yr T-bond HU5YT=RR +55 basis points to +471bps over bmk*
10-yr T-bond HU10YT=RR +46 basis points to +406bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1123 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, Writing by Dagmara
Leszkowicz; editing by John Stonestreet)
