* End of EdF/Enea sale talks hits zloty; C/A data risk
* Polish c.bank says larger revisions can come in June
* Romania c.bank keeps benchmark interest rate flat
(Recasts, adds quotes, details)
By Marcin Goettig and Jason Hovet
WARSAW/PRAGUE, March 31 (Reuters) - The zloty hit a more
than one-week low on Thursday on news France's EdF <EDF.PA>
walked away from talks to buy a Polish utility, denting the
government's privatisation plan and erasing earlier currency
gains.
The Polish currency has bounced around in recent sessions as
investors pull between rising expectations of interest rate
hikes and at the same time growing worry Poland may start
showing a sizable "twin deficit".
The country's $5 billion privatisation plan has also been a
supporting factor but took a hit on Thursday when sources told
Reuters that EdF <EDF.PA> ditched a plan to buy a 51 percent
stake in Enea <ENAE.WA> worth some 5 billion zlotys ($1.8
billion). []
The zloty lost as much as half a percent, wiping out a
slight rise after central bank data showed a smaller-than-feared
upward revision in the current account deficit for the fourth
quarter of 2010, but did not end chances of a later revision.
The currency <EURPLN=> bid 0.4 percent down at 4.027 to the
euro by 1421 GMT, while Enea shares lost 3 percent.
Warsaw stocks <> mostly rose, while other bourses in
central Europe were lower. The Hungarian forint <EURHUF=> firmed
while the Romanian leu <EURRON=> lost 0.4 percent after the
central bank left interest rates unchanged at 6.25 percent as
expected but cut minimum reserve requirements to ease lending.
Investors have been fretting over the large 'errors and
omissions' category in Poland's balance of payments data that
showed outflows amounting to 4 percent of gross domestic product
in 2010, more than the reported deficit on the current account.
Earlier on Thursday the head of the Polish central bank's
statistics department, Jozef Sobota, had played down the
prospect of a significant revision in an interview for the
Parkiet business paper in which he said an adjustment in the
data was possible in June. []
"Subsequently, (the euro) rallied back (versus the zloty) as
the realisation dawned that the issue has just been kicked down
the road somewhat and remains unresolved," RBS strategist
Timothy Ash.
Market players say a risk of upward revision in the current
account deficit could spark a potential selloff of the zloty as
foreign investors are heavily invested in Polish bonds.
A revision of the deficit to above the 5 percent of GDP
level considered risky for a developing country could encourage
investors to close some of their positions, sending yields
higher and the zloty lower.
RATES VIEW
Analysts said Romania's central bank was not likely to cut
interest rates any time soon to give a boost to the
recession-struck economy, as inflation remained a risk.
But markets were expecting a slightly more hawkish tone from
the bank, which created a drag on the leu when it did not come.
"The more notable thing is that the central bank... has
become increasingly hawkish on inflation concerns. The tone has
shifted in recent communications," said Neil Shearing at Capital
Economics.
Elsewhere, the Czech crown <EURCZK=> was steady within its
recent range on the weak side of 24.500 per euro. The Hungarian
forint <EURHUF=> gained 0.2 percent.
"The forint is benefitting from a higher interest rate
environment and carry trade as other countries in the region,
most notably Poland, are not seen hiking rates very
aggressively," a dealer said.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.528 24.515 -0.05% +1.92%
Polish zloty <EURPLN=> 4.027 4.012 -0.37% -1.71%
Hungarian forint <EURHUF=> 266.2 266.71 +0.19% +4.43%
Croatian kuna <EURHRK=> 7.373 7.374 +0.01% +0.09%
Romanian leu <EURRON=> 4.12 4.104 -0.39% +2.74%
Serbian dinar <EURRSD=> 103.42 103.57 +0.15% +2.42%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -1 basis points to -2bps over bmk*
7-yr T-bond CZ7YT=RR -1 basis points to +61bps over bmk*
10-yr T-bond CZ9YT=RR -1 basis points to +65bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1622 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaus, Writing by Marcin Goettig and
Jason Hovet; editing by Toby Chopra/Ruth Pitchford)
