* Zloty retraces IMF gains, but seen as outperformer
* Serbia revises fcasts, sees recession
* Fitch sees no early euro zone entry
* Leu continues retreat, Romania sells govt bonds
(Adds Serbia GDP, Polish comments, Romania auction.)
By Jason Hovet and Sandor Peto
PRAGUE/BUDAPEST, April 16 (Reuters) - The zloty retreated on
Thursday from a three-month high hit this week, leading emerging
European peers lower and giving up sharp gains as investors cool
on Poland's move to get an IMF flexible credit line.
Appetite for riskier assets rose in the past weeks and
assets in the region got additional help from pledges to bolster
IMF funds for hard-hit emerging economies.
But data showed on Thursday that emerging giant China's
growth slowed more than expected and that industrial output in
the euro zone, Central Europe's main export market, plunged in
February, maintaining risks. [] [].
Serbia was the latest country in Central Europe, hard hit by
the global crisis, to revise lower its GDP forecasts, now
projecting a 2 percent contraction for the year rather than 3.5
percent growth. []
"Markets are still quite risk driven," said Lutz Karpowitz,
a senior currency strategist with Commerzbank in Frankfurt.
A Budapest-based currency dealer said: "The euro eased
against the dollar, the stock market rally (of the past weeks')
has lost steam, and the whole region is lower now."
Fitch Ratings warned on Thursday that its sovereign ratings
for eastern European states do not build in any expectations
that the European Union would allow them to adopt the euro
unless they meet the strict economic requirements.
[]
The zloty fell 0.6 percent from Wednesday's domestic close
to bid at 4.288 to the euro by 1400 GMT.
It jumped at the start of the holiday-shortened week after
Poland said it would tap the International Monetary Fund's new
flexible credit line, while investors got more bullish on the
country's aims to enter the euro proving ground ERM-2 this year.
Karpowitz said that, while the moves would add support for
the currency, the zloty firming was overdone because no actual
IMF money was flowing in and euro hopes were not certain.
But the head of Fitch Ratings emerging Europe sovereigns
department, Edward Parker said the IMF facility reinforced the
country's "A-" ratings.[]
The zloty has led central European currency losses since the
second half last year when the region was at record highs,
falling 22 percent, but has been the biggest gainer this month.
Strategists expect the IMF credit line (FCL) could reverse
the zloty's underperformance against regional peers, reducing
risks, while Polish central banker Halina Wasilewska-Trenkner
warned that Poland must stick to its deficit target or risk its
access to the IMF funds. []
Polish central bank chief Slawomir Skrzypek said on
Wednesday that ERM-2 was not now a top priority. []
RETREAT
In Hungary, the forint <EURHUF=> was 0.5 percent down to bid
at 292.19 per euro, and the Czech crown <EURCZK=> dipped to
26.86, weaker by 0.2 percent.
Hungary's new government lost its economy minister designate
but dealers said political developments would have little market
impact until it becomes clear whether the cabinet will be able
to carry out its plans for deep spending cuts. []
Hungary remains the only major state in the region whose
primary government bond market remains frozen and the country
clings on to an IMF lifeline secured in October.
Romania, also one of the region's states with weaker
fundamentals, held a successful auction, selling 79.7 million
leu worth of three-year bonds.[] The leu<EURRON=>,
however, shed 0.6 percent on the back of stop-losses.
Czech bond prices edged up after a Wednesday auction was
three times overbid, but the ministry sold less than previously,
which dealers said gave support after supply concerns earlier.
----------------------MARKET SNAPSHOT------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.86 26.815 -0.17% -0.4%
Polish zloty <EURPLN=> 4.288 4.261 -0.63% -4.03%
Hungarian forint <EURHUF=> 292.19 290.65 -0.53% -9.8%
Croatian kuna <EURHRK=> 7.375 7.372 -0.04% -0.14%
Romanian leu <EURRON=> 4.209 4.185 -0.57% -4.62%
Serbian dinar <EURRSD=> 92.72 93.27 +0.59% -3.49%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +37 basis points to 215bps over bmk*
4-yr T-bond CZ4YT=RR -14 basis points to +205bps over bmk*
8-yr T-bond CZ8YT=RR -9 basis points to +291bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -29 basis points to +917bps over bmk*
5-yr T-bond HU5YT=RR -65 basis points to +846bps over bmk*
10-yr T-bond HU10YT=RR -53 basis points to +730bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1600 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/Sandor
Peto; Editing by Toby Chopra and Andy Bruce)
