CEE MARKETS 2-FX firmer on stocks rise; forint leads gains

                                
 PRAGUE, Feb 3 (Reuters) - Central European currencies firmed
in morning trade on Tuesday, helped by a rise in stocks and
bouncing back from near fresh lows with Hungary's forint in the
lead.
                                
 Central European stocks edged higher in open trade, tracking
western peers and giving reprieve to currencies hammered this
year by darkening economic outlooks and falling interest rates.
                                
 The forint <EURHUF=> had edged up 0.6 percent to 295.5 per
euro by 0910 GMT, off its all-time low of 299.3 hit last week.
                                
 Forint losses -- already at 10.8 percent in 2009 -- raise
the credit risk of Hungary's banks, a Standard & Poor's official
said on Monday, adding any problems in the banking system
requiring costly state help could put its ratings under
pressure. [ID:nL2335997]
                                
 A forint level above 300 could also hit households which
took out loans in Swiss francs, euros and the Japanese yen in
past years as their monthly repayments rise, analysts say.
                                
 "Sentiment is overall somewhat more positive, but at any
moment there can be a break upwards," one Budapest dealers said.
"Some are saying that a correction (towards stronger levels) is
now ripe, but I just don't see why that would happen."
                                
 In Poland, the zloty <EURPLN=> added 0.4 percent to 4.47 per
euro, and the Czech crown <EURCZK=> rose to 28.183 after nearing
a 1-1/2 year low earlier.
                                
 "Volatility has dropped on markets... and there is an
overall better mood," said a Prague trader, but adding liquidity
remained low, also hurt by bad weather in London keeping some
trade thinner than usual.
                                
 Central Europe's government officials and central bankers
have slashed growth forecasts and cut interest rates in the face
of deepening recession in the euro zone, a main export market.
                                
 Romania is expected to join the policy loosening trend on
Wednesday, while the Czechs are seen cutting interest rates on
Thursday. [ID:nL2408360] [ID:nLS36071] 
Romania's leu <EURRON=> gained with the region on Tuesday,
adding 0.4 percent to 4.305 per euro. Data showed on Monday a
fall in central bank hard currency reserves, signalling
potential intervention last month. [ID:nL2167237]
                                
 "I don't see how a cut in the key interest rate can hurt the
leu, because interest rates on the interbank market are way
above the central bank's anyway," one dealer said, adding fears
of central bank intervention can put a floor on the currency.
                                
 Interest rate cuts have given short-term boosts to
currencies in recent months as investors cheer measures to
support buckling economies as inflation drops off.
                                
 Gross domestic product data in the region's largest economy,
Poland, last week showed a sharp slowing in the final three
months of 2008. The central bank there has cut interest rates by
175 basis points since November.
                                
 One policymaker said on Tuesday a further reduction cannot
be ruled, while another gave a cut a 50 percent chance.
[ID:nSP405702] [ID:nWAR007865]
                                
 Polish bond yields ticked lower on Tuesday, helped by the
firmer currency and expectations of more rate cuts.
                                
 
----------------------MARKET SNAPSHOT-------------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2009 
Czech crown      <EURCZK=>   28.183   28.218  +0.12%    -5.07%
Polish zloty     <EURPLN=>    4.471    4.487  +0.36%    -7.96%
Hungarian forint <EURHUF=>  295.47   297.15   +0.57%    -10.8%
Croatian kuna    <EURHRK=>    7.379    7.354  -0.34%    -0.19%
Romanian leu     <EURRON=>    4.305    4.32   +0.35%    -6.75%
Serbian dinar    <EURRSD=>   94.368   94.429  +0.06%    -5.18%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR   +5 basis points to  108bps over bmk*
4-yr T-bond   CZ4YT=RR   +4 basis points to  +96bps over bmk*
8-yr T-bond   CZ8YT=RR    -4 basis points to  +122bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR   +1 basis points to  +333bps over bmk*
5-yr T-bond   PL5YT=RR   +1 basis points to  +269bps over bmk*
10-yr T-bond PL10YT=RR   +1 basis points to  +243bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1011 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 [EMRG]
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 [CEN]  Economic Data Guide <ECONGUIDE> 
Official rates [GLOBAL/INT]  Emerging Diary [EMRG/DIARY] 
Top events [M/DIARY]  Diaries [DIARY] Diaries Index [IND/DIARY] 
 (Reporting by Reuters bureaus, writing by Jason Hovet)