WARSAW, July 7 (Reuters) - Central European currencies were
mostly lower on Wednesday as sentiment towards equities soured,
hitting riskier assets, with the Polish zloty shedding gains
posted on Sunday's market-friendly election result.
The region's currencies were helped on Tuesday by a bout of
optimism on global stock exchanges while the zloty found extra
support from the victory of pro-business candidate Bronislaw
Komorowski, favoured by markets, in the presidential election.
But sentiment looks to be turning more negative after U.S.
service sector data stoked fears of a double-dip recession and
Asian bourses slid.
"The post-election optimism on the zloty is waning so we're
back to observing global sentiment," a trader at a Warsaw bank
said.
"The U.S. stock exchanges were up (on Tuesday) but now
futures are down, as were the Asian bourses," he said.
At 0715 GMT, both Poland's zloty <EURPLN=> and Hungary's
forint <EURHUF=> were 0.4 percent weaker against the euro
compared with Tuesday afternoon. The Czech crown <EURCZK=> was
down 0.1 percent.
Romania's leu <EURRON=> inched up 0.1 percent, extending
Tuesday's gains as a loan tranche from the International
Monetary Fund is expected to enter central bank reserves later
on Wednesday.
The IMF approved on Friday a $1.115 billion disbursement to
the recession-hit country, bringing total disbursements under a
rescue package to $13.475 billion.
The leu has firmed more than 4 percent since last Thursday,
when it hit its lowest since the introduction of the euro on
worries about the speed of economy recovery and whether the IMF
would release more funds.
In the Czech Republic, where the crown has gained 1.8
percent over the past four days, investors shrugged off better
than expected retail and foreign trade data. Dealers suggested
the currency may stay rangebound.
BONDS
On the fixed income front, yields were little changed, but
dealers said there was an optimistic mood regarding buying Czech
bonds with short maturities because there was no auction planned
for this week.
It is the opposite case in Poland, where the finance
ministry is set to offer 3.0-5.0 billion zlotys worth of its
2-year paper at 1000 GMT on Wednesday.
Dealers said the offer was a large one but that the
government should have no problems in finding buyers and prices
should remain stable.
"We're now in a holiday period so I think there we'll see a
lull (on the market today)," a Warsaw-based fixed income trader
said.
In Poland, apart from the bond tender investors are likely
to watch developments on foreign markets. In the Czech Republic
those will include an upcoming Bund auction, dealers said.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.52 25.502 -0.07% +3.13%
Polish zloty <EURPLN=> 4.12 4.105 -0.36% -0.39%
Hungarian forint <EURHUF=> 284.96 283.97 -0.35% -5.13%
Croatian kuna <EURHRK=> 7.189 7.189 0% +1.67%
Romanian leu <EURRON=> 4.23 4.235 +0.12% +0.17%
Serbian dinar <EURRSD=> 103.723 103.82 +0.09% -7.56%
Yield Spreads
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR 0 basis points to +412bps over bmk*
5-yr T-bond PL5YT=RR -1 basis points to +377bps over bmk*
10-yr T-bond PL10YT=RR +1 basis points to +325bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -1 basis points to +607bps over bmk*
5-yr T-bond HU5YT=RR -1 basis points to +575bps over bmk*
10-yr T-bond HU10YT=RR +1 basis points to +483bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 09815 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
(Writing by Kuba Jaworowski; editing by Mike Peacock, John
Stonestreet)
