* FX at multi-month lows, tracking sharply falling euro
* Czech c.bank surprises with rate cut, crown loses
* Poles says euro entry not a priority
(Updates throughout)
By Jason Hovet and Dagmara Leszkowicz
PRAGUE/WARSAW, May 6 (Reuters) - Emerging European
currencies fell for a fifth consecutive day on Thursday, with
risk appetite low amid persistent fears Greece's debt crisis
could spread, while a surprise rate cut weighed on the Czech
crown.
Worries the escalating Greek crisis could affect Portugal or
Spain have shaken central Europe's main reference currency, the
euro, as well as European stocks, and pushed central European
policymakers to move more cautiously on interest rates and bond
issuance.
Central Europe has been hit by selling of riskier assets
despite lower debt piles and better growth outlooks than the
rest of the continent.
"What wee see on the market is just renewed risk aversion,"
said Przemyslaw Winiarczyk, dealer at Millennium bank. "These
are just tensions, the market is very volatile, other levels are
broken and currencies are diving."
By 1420 GMT the Polish zloty <EURPLN=> was down almost 1.0
percent against the euro, hovering around three-month lows. It
has led losses in the region, dropping almost 5 percent in a
month.
The Hungarian forint <EUHUF=> fell 0.8 percent, and was
trading around six-month lows, while the Czech crown <EURCZK=>
weakened 0.3 percent against the euro.
Only Romania's leu <EURRON=> bucked the regional trend,
rising 0.2 percent
"The forint and the zloty have strengthened the most
recently as lots of investors bought units at the start of the
year so now they just took profits, though reaction looked too
panicky, " said Piotr Kalisz, chief economist at Citibank
Handlowy.
In the Czech Republic, the central bank surprised markets
with a quarter point rate cut. Markets had priced out any chance
of a cut this week after the crown lost 2 percent in the Greek
market turmoil. Analysts had also expected no change, but said
the bank likely was influenced by a tame inflation outlook.
"After the Greek problems escalated and the crown weakened,
we did not expect a cut," said Pavel Sobisek, chief economist at
UniCredit in Prague. "The risk of this decision is the crown
exchange rate destabilises."
Analysts said the crown could become more of a funding
currency once market jitters ease. The Czech benchmark interest
rate is now a quarter point below the euro zone rate.
Romania cut rates to a new low of 6.25 percent on Tuesday
and warned of risks from fiscal policy and the Greek crisis.
Central bank Governor Mugur Isarescu said on Thursday there was
still room, though limited, to cut rates. []
EURO ENTRY DELAYED?
Poland's Prime Minister said on Thursday that adopting the
euro was not a priority for now, and signalled he was cautiously
observing the debt crisis engulfing Greece and threatening other
euro zone countries. []
His comments follow previous remarks by the central bank's
deputy head Witold Kozinski that Poland's plan to adopt the euro
would be delayed further by Greece's debt crisis.
Poland said in 2008 that it would like to join the euro zone
in 2012 but it dropped a fixed target date when the global
financial crisis struck, crippling growth.
A recent Reuters poll showed plans by the newest EU members
to adopt the euro have not been delayed by the Greek debt
crisis. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 26.07 25.99 -0.31% +0.95%
Polish zloty <EURPLN=> 4.112 4.072 -0.97% -0.19%
Hungarian forint <EURHUF=> 279.77 277.58 -0.78% -3.37%
Croatian kuna <EURHRK=> 7.259 7.252 -0.1% +0.69%
Romanian leu <EURRON=> 4.175 4.183 +0.19% +1.49%
Serbian dinar <EURRSD=> 99.51 99.193 -0.32% -3.65%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -2 basis points to 99bps over bmk*
7-yr T-bond CZ7YT=RR -4 basis points to +106bps over bmk*
10-yr T-bond CZ9YT=RR +3 basis points to +105bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +5 basis points to +413bps over bmk*
5-yr T-bond PL5YT=RR +5 basis points to +364bps over bmk*
10-yr T-bond PL10YT=RR +2 basis points to +300bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +55 basis points to +587bps over bmk*
5-yr T-bond HU5YT=RR +55 basis points to +541bps over bmk*
10-yr T-bond HU10YT=RR +42 basis points to +456bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1620 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet; editing
by John Stonestreet and Susan Fenton)
