* FX cut losses on profit taking after week-long decline
* Market turmoil wipes out market pricing for Czech rate cut
(Recasts to update prices, adds quote)
By Jason Hovet
PRAGUE, May 6 (Reuters) - Central European currencies cut
early losses on Thursday, helped by profit-taking after five
days of decline but appetite for risk stayed low amid persistent
fears that Greece's debt crisis could spread.
The escalating crisis has shaken central Europe's main
reference currency the euro and European stocks, and pushed
central European policymakers to move more cautiously on
interest rates and bond issuance.
Central Europe, despite lower debt piles and better growth
outlooks than the rest of the continent, has been hit in recent
weeks by worries the crisis may spread to other euro zone
periphery states like Portugal or Spain.
Currencies fell early against the euro for a fifth straight
session on Thursday before cutting losses as investors booked
profits ahead of a European Central Bank meeting.
"We have come quite far in a very short period and are ripe
for some profit-taking," a Stockholm-based central European
currency dealer said. "This isn't over. Investors are fearful
(of contagion) and some may be on the sidelines for some time."
The Hungarian forint <EURHUF=> wiped out early 1 percent
losses to move off a six-month low, bidding flat on the day at
277.57 to the euro by 1010 GMT.
The Polish zloty <EURPLN=> lost 0.1 percent, earlier
touching a new three-month low. It has led losses in the region,
dropping 6 percent in a month.
CAUTION
Polish central bank deputy head Witold Kozinski said on
Thursday the country's euro adoption plan would be delayed
further by Greece's debt crisis, in the latest sign of how the
crisis is delaying or changing policymakers' plans.
Czech Finance Minister Eduard Janota was quoted on Thursday
as saying the market turmoil may limit foreign bond issues to 28
percent of total issuance.
But the finance ministry later denied the figure and said
its plan was still foreign issuance of up to 50 percent of the
total. [] []
Czech domestic bond yields were little changed even though
dealers said domestic issuance would be heavy in the second half
of the year following Janota's comments.
The central bank is expected to keep interest rates flat on
Thursday. Dealers said the falling crown currency <EURCZK=> has
wiped out any chance of a rate cut that had been priced into the
market just a week ago.
The crown inched up 0.2 percent below the 26 per euro level.
It has lost almost 3 percent since the last policy meeting in
March.
"Like the majority of analysts we expect interest rates to
remain unchanged today as the strong depreciation pressure over
the past few days should have made it clear to the CNB just how
fragile last year's appreciation was," Commerzbank said.
Romania cut rates to a new low of 6.25 percent on Tuesday
and warned of risks from fiscal policy and the Greece crisis.
Governor Mugur Isarescu said on Thursday there was now less room
to cut rates. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.95 25.99 +0.15% +1.42%
Polish zloty <EURPLN=> 4.075 4.072 -0.07% +0.71%
Hungarian forint <EURHUF=> 277.57 277.58 0% -2.6%
Croatian kuna <EURHRK=> 7.254 7.252 -0.03% +0.76%
Romanian leu <EURRON=> 4.182 4.183 +0.02% +1.32%
Serbian dinar <EURRSD=> 99.42 99.193 -0.23% -3.56%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -5 basis points to 97bps over bmk*
7-yr T-bond CZ7YT=RR -2 basis points to +108bps over bmk*
10-yr T-bond CZ9YT=RR -2 basis points to +99bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1211 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
For related news and prices, click on the codes in brackets: All
emerging market news []
Spot FX rates
Eastern Europe spot FX <EEFX=> Middle East spot FX <MEFX=>
Asia spot FX <ASIAFX=> Latin America spot FX <LATAMFX=>
Other news and reports
World central bank news [] Economic Data Guide <ECONGUIDE>
Official rates [] Emerging Diary []
Top events [] Diaries [] Diaries Index []
(Reporting by Reuters bureaus, writing by Jason Hovet; editing
by John Stonestreet and Susan Fenton)
