* Forint leads losses, currencies feel global risk aversion
* Polish 10-yr bond tender well-bid, Hungary on roadshow
(Updates throughout)
By Marton Dunai and Marius Zaharia
BUDAPEST/BUCHAREST, July 8 (Reuters) - Regional currencies
fell on Wednesday, with the Polish zloty and the Hungarian
forint breaking key technical levels during a global flight from
risky assets, while bonds resisted weakening pressure.
Currencies consolidated at lower levels in late trade after
falling sharply overnight and in the morning, recovering
slightly after U.S. bourses opened higher. []
It took three days of a poor global mood and a raft of data
in Hungary and Czech Republic showing a regional recovery was
not coming very soon to push the zloty beyond 4.40 and the
forint beyond 275 to the euro, which were eyed as support
levels.
"Players have been fighting to break these levels every day
this week and once they were broken, heavy losses followed," one
dealer in Bucharest said.
By 1336 GMT, the forint <EURHUF> had lost 1.1 percent and
the zloty <EURPLN=> had weakened by 0.3 percent, both slightly
off morning lows. The Czech crown <EURCZK=> and the Romanian leu
<EURRON=> lost 0.4 and 0.1 percent, respectively.
Poland's finance ministry saying the Polish currency had
stabilised and there was no need for direct conversion of EU
funds on the FX market, [] failed lift the market's
mood.
"The sky is getting darker," a Budapest-based dealer said.
"This is not a correction. The crisis feeling is coming back."
Analysts said 4.45 was a next key level for the Polish
currency, likely to find itself under pressure from weak
corporate results and losses in other currencies. As for the
forint, the market eyed the 278.50 and 280 levels.
BOND DEMAND STRONG
Poland sold 2 billion zlotys in 10-year bonds but sold no
5-year bonds also offered at Wednesday's switch tender and
dealers said appetite for longer maturity was bigger as there
will be no supply of such paper this summer. []
"The market opened weaker, tracking the falling zloty and a
correction on the stock market," said Marek Kaczor, dealer at
PKO BP bank in Warsaw. "The sentiment was improved by the switch
tender, as such a big demand for the Polish 10-year bonds meant
Poland's paper was popular among foreign investors."
Poland's $2 billion 10-year eurobond issue this week,
oversubscribed fourfold, serves to indicate a healthier market,
UniCredit analyst Martin Blum said in a note.
"(The bond issue) is clearly a positive for sovereign credit
and more broadly bolster the funding backdrop," Blum wrote.
"As long as the (finance ministry) doesn't start issuing
especially cheap eurobonds from here on, yesterday's stellar
issue could arguably serve as a positive for local currency
markets, once risk appetite stabilises."
Hungary also started an investor roadshow on Wednesday
[] a week after its finance minister said the
country planned to issue a eurobond by the end of September.
[]
Hungary's bond market remained stable despite the forint's
weakness, but that reflected a lack of supply rather than
organic demand for the assets, local dealers said.
Hungary recently restarted bond auctions after a six-month
hiatus, and sold 42 billion forints worth of bonds in a heavily
oversubscribed tender last week.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.026 25.922 -0.4% +2.79%
Polish zloty <EURPLN=> 4.407 4.392 -0.34% -6.63%
Hungarian forint <EURHUF=> 276.8 273.83 -1.07% -4.79%
Croatian kuna <EURHRK=> 7.34 7.338 -0.03% +0.34%
Romanian leu <EURRON=> 4.212 4.207 -0.12% -4.69%
Serbian dinar <EURRSD=> 92.378 92.477 +0.11% -3.14%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +26 basis points to 167bps over bmk*
4-yr T-bond CZ4YT=RR -30 basis points to +172bps over bmk*
8-yr T-bond CZ8YT=RR +10 basis points to +314bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +9 basis points to +424bps over bmk*
5-yr T-bond PL5YT=RR -2 basis points to +332bps over bmk*
10-yr T-bond PL10YT=RR -1 basis points to +298bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -6 basis points to +786bps over bmk*
5-yr T-bond HU5YT=RR -18 basis points to +705bps over bmk*
10-yr T-bond HU10YT=RR -17 basis points to +595bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1636 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaux, writing by Marton Dunai and
Marius Zaharia; Editing by Toby Chopra)
