(Adds details, fixed income)
WARSAW, Oct 9 (Reuters) - Emerging European currencies
gained ground against the euro on Thursday after falls a day
earlier, but trade was volatile as the credit crisis weighed and
dealers said currencies are likely to weaken further.
The zloty <EURPLN=> jumped 1.1 percent against the euro to
3.437 by 0805 GMT, while Hungary's forint <EURHUF=> rose 0.6
percent to 250.86, helped by a tentative return of global risk
appetite, which tends to support emerging market assets.
The Czech crown <EURCZK=> rebounded from early losses to
gain 0.5 percent to 24.515 against the euro while Romania's leu
<EURRON=> surged 1.7 percent to 3.815.
The Czech central bank held off on discussing interest rates
at a meeting on Thursday, while Polish central bankers have
signalled there is less chance of more monetary tightening after
the world's major central banks slashed interest rates.
"It seems the market has calmed down. But the situation
overall is still nervous and trade will be volatile," said Jan
Koprowski, a dealer at BNP Paribas.
Serbia bucked the trend, falling 0.6 percent to 80.98 per
euro as banks built long euro positions, dealers said.
In the Czech Republic, industrial output in August fell more
than expected on declining orders from abroad [],
backing the case for lower official borrowing costs in the face
of a deepening economic slowdown in the wider world.
"They will likely cut by 25 basis points in November," a
Prague-based dealer said, adding the market will start pricing
in further cuts. "The question is whether (the central bank)
will make a 25 or 50 basis points cut."
He said the crown could again test the 24.95 per euro
resistance level in coming days.
Interest rate swaps were stable after dropping around 20
basis points on Wednesday.
Czech bonds weakened, extending losses from a day earlier
when dealers said market makers agreed to widen spreads in the
face of deteriorating liquidity in the market.
Hungarian bond markets strengthened slightly as market
sentiment improved, pushing yields lower, but activity on the
market remained low. In Poland, yields were up slightly.
"The key factor for the (bonds) market is still the
situation on the global market," said a Warsaw-based dealer.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 24.515 24.641 +0.51% +7.48%
Polish zloty <EURPLN=> 3.437 3.474 +1.07% +4.54%
Hungarian forint <EURHUF=> 250.860 252.420 +0.62% +0.79%
Croatian kuna <EURHRK=> 7.125 7.130 +0.07% +2.75%
Romanian leu <EURRON=> 3.815 3.879 +1.65% -6.56%
Serbian dinar <EURRSD=> 80.980 80.518 -0.57% -2.82%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +7 basis points to 51bps over bmk*
5-yr T-bond CZ5YT=RR -15 basis points to +42bps over bmk*
10-yr T-bond CZ9YT=RR +59 basis points to +55bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -5 basis points to +291bps over bmk*
5-yr T-bond PL5YT=RR -9 basis points to +239bps over bmk*
10-yr T-bond PL10YT=RR -10 basis points to +196bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -11 basis points to +695bps over bmk*
5-yr T-bond HU5YT=RR +1 basis points to +665bps over bmk*
10-yr T-bond HU10YT=RR -16 basis points to +502bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1005 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
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(Reporting by Reuters bureaus, writing by Dagmara
Leszkowicz; editing by Patrick Graham)
