* Zloty, forint lead cautious recovery, stocks up
* Greece main focus, relief is likely short-term
(Updates throughout)
By Jason Hovet and Dagmara Leszkowicz
PRAGUE/WARSAW, April 29 (Reuters) - Emerging European currencies rebounded
on Thursday after a recent sell-off but the forex market is likely to remain
highly volatile in the coming days as problems in the euro zone periphery stay
in the spotlight.
Heavily indebted Greece readied severe austerity measures on Thursday to
secure multi-billion dollar aid, boosting markets throughout Europe, but dealers
said relief in the market was likely to be short term. []
"The zloty and the forint defended their key levels of 3.955 and 272.0 to
the euro respectively, but I suppose the market will be surprised by fresh news
coming from the euro zone quite often in the near-term," said Bartosz Pawlowski,
FX senior strategist at BNP Paribas.
"At least we can catch a breath now."
Markets have swayed back and forth this week, rebounding on Wednesday on a
push to fast-track Greek aid before giving up gains late in the session after a
Standard & Poor's rating downgrade for Spain.
Currencies were on a stronger footing on Thursday, led by a 0.6 percent gain
for the zloty <EURPLN=> and a 0.5 percent rise for the Hungarian forint
<EURHUF=> by 1355 GMT.
The Czech crown <EURCZK=> was 0.4 percent stronger while the Romanian leu
<EURRON=> was flat against its previous close.
Bond markets also rebounded with yields falling some 5-6 basis points in
Poland. The country's finance ministry sold 1.78 billion zlotys in bonds
maturing in 2021 at a switch tender on Thursday, but dealers said it had no
significant impact on the market.
"It looks like the situation calmed down a bit and now bond prices may
rise," said one Warsaw-based dealer.
Central European markets, which had been largely immune to Greece's problems
this year due to their relatively strong growth outlooks and lower debt, have
been hit hard this week after ratings downgrades for three euro zone periphery
states.
Markets fear Greece may not secure aid in time to meet a deadline of May 19
when a maturing bond needs to be refinanced. Reservations over the proposed aid
from Germany, which would be the biggest euro zone lender, have slowed the
process.
NO QUICK RELIEF
The turmoil has hit investor appetite for central Europe and prompted the
Czechs to delay a Eurobond issue, while Poland said it may trim its debt
issuance. [] []
Analysts said pressure was not likely to subside quickly.
"We are somewhat suspicious towards further development in the short term,"
KBC analysts said. "We are afraid current nervousness around Greece may continue
to weigh on the region at least through the upcoming weekend."
They added that prospects for a Czech interest rate cut next week will hurt
the crown, which touched a seven-week low this week.
"After the recent rate hike in Brazil, CEE is the last region where central
banks are closer to cuts than hikes," Pawlowski said. "Next week we will
probably see a cut in the Czech Republic."
Warsaw <> led stock market gains in the region, rising nearly 2
percent.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25,486 25,577 +0,36% +3,26%
Polish zloty <EURPLN=> 3,91 3,933 +0,59% +4,96%
Hungarian forint <EURHUF=> 267,64 268,96 +0,49% +1,01%
Croatian kuna <EURHRK=> 7,246 7,249 +0,04% +0,87%
Romanian leu <EURRON=> 4,134 4,134 0% +2,5%
Serbian dinar <EURRSD=> 99,152 99,15 0% -3,3%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -8 basis points to 66bps over bmk*
7-yr T-bond CZ7YT=RR -5 basis points to +75bps over bmk*
10-yr T-bond CZ9YT=RR -9 basis points to +74bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +6 basis points to +371bps over bmk*
5-yr T-bond PL5YT=RR +5 basis points to +314bps over bmk*
10-yr T-bond PL10YT=RR +3 basis points to +261bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +4 basis points to +441bps over bmk*
5-yr T-bond HU5YT=RR +6 basis points to +412bps over bmk*
10-yr T-bond HU10YT=RR +5 basis points to +362bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1555 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 []
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(Reporting by Reuters bureaus, writing by Jason Hovet, editing by Stephen
Nisbet/John Stonestreet/Susan Fenton)
