* GDP data shows weak recovery in Hungary, Czech, Romania
* Poland seen better placed, helping zloty
* Investors cut risk, Greece worries remain
(Recasts with new prices, adds bonds, stocks)
By Jason Hovet
PRAGUE, Feb 12 (Reuters) - The Polish zloty reversed gains
on Friday and lost with peers when Chinese monetary tightening
pushed investors to cut risk, adding to volatility brought by
worries over economic recovery and the euro zone's periphery.
The zloty had risen earlier in the session while central
European peers fell following a round of fourth quarter economic
output data that showed Hungary and Romania still in recession
and the Czech recovery stalled. []
Poland's economy was the only in the region to avoid
contraction last year, helped by a larger consumer base.
On Friday, China raised banks' reserve requirements,
prompting a flight from risky emerging assets that hit central
Europe and the zloty. []
By 1125 GMT, the zloty <EURPLN=> had dipped 0.3 percent to
bid at 4.03 to the euro. Earlier in the session, it had firmed
below the key 4.0 per euro level that it breached for only the
first time in a year last week.
Analysts said its better economic fundamentals made the
zloty a safer bet than emerging European peers and -- at the
moment -- the euro, which has been hit by rising concern over
debt in euro zone periphery countries like Greece.
EU leaders pledged support for Greece on Thursday but
disappointed with the lack of a detailed plan. []
"All the outside-EMU currencies having good fundamental are
outperforming at the moment," said a central European currency
dealer based at a Stockholm bank.
* For a "Take a Look" on Greece, click on []
BEST OF THE REST
Stocks were able to hold onto gains, with Warsaw <>
leading and only Bucharest <> edging down.
The Czech crown <EURCZK=>, Hungarian forint <EURHUF=> and
Romanian leu <EURRON=> all slipped about 0.4 percent.
Weakness in the central Europe's export-driven economies
like Hungary and the Czech Republic was highlighted on Friday by
stagnation in Germany, a main trade partner. []
The Czech economy unexpectedly contracted on a quarterly
basis to end 2009, after two quarters of growth.
The central bank is expected to raise interest rates in the
second half of this year, but some analysts said speculation
might rise of another interest rate cut after the data. Bonds
and interest rate swaps were little moved. []
Financial turmoil last year delayed monetary easing from the
Hungarian and Romanian central banks, which are both expected to
cut interest rates further this year.
Data showed Hungary's and Romania's economies were still
stuck in recession in the fourth quarter. At the same time,
inflation jumped in January, complicating monetary policy.
[] []
Hungarian bonds were flat but interest rate swaps rose. The
central bank is expected to cut a quarter percentage point from
the 6 percent main rate this month.
Analysts expect market jitters over Greece and the euro zone
will continue to keep some pressure on risk appetite, which
could again start to weigh more on markets.
"(...) markets remain well aware that the problem is not
solved yet and that there are other cases similar to Greece in
the euro area," Danske Bank said.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 26.073 25.971 -0.39% +0.94%
Polish zloty <EURPLN=> 4.03 4.018 -0.3% +1.84%
Hungarian forint <EURHUF=> 271.25 270.02 -0.45% -0.33%
Croatian kuna <EURHRK=> 7.315 7.32 +0.07% -0.08%
Romanian leu <EURRON=> 4.125 4.109 -0.39% +2.72%
Serbian dinar <EURRSD=> 98.39 98.56 +0.17% -2.55%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +3 basis points to 96bps over bmk*
7-yr T-bond CZ7YT=RR +8 basis points to +143bps over bmk*
10-yr T-bond CZ10YT=RR +1 basis points to +126bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +2 basis points to +386bps over bmk*
5-yr T-bond PL5YT=RR +3 basis points to +325bps over bmk*
10-yr T-bond PL10YT=RR +4 basis points to +290bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +14 basis points to +553bps over bmk*
5-yr T-bond HU5YT=RR +3 basis points to +510bps over bmk*
10-yr T-bond HU10YT=RR +1 basis points to +457bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1226 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet; Editing
by Toby Chopra)
