CEE MARKETS 2-FX falls on weak euro as rally loses steam

                                
  (Adds details, fixed income)
                                
 PRAGUE, Feb 10 (Reuters) - Central European currencies
slipped on Tuesday, pulling back from recent highs due to a
weakening euro as a relief rally from the past week lost steam.
Currencies had rebounded from new lows in the last week as
investors toyed with riskier assets, giving some respite to a
region hard hit by sinking economic outlooks.
                                
 The Czech crown <EURCZK=> fell 2.2 percent from Monday's
domestic close to bid at 28.147 to the euro by 1001 GMT to lead
losses in illiquid trade. [ID:nWLA6996]
                                
 Barclays Capital recommended on Monday selling the Czech
crown at its current levels, saying the currency's recent rally
would be short-lived due to poor growth and competitiveness
outlooks, it said on Monday. [ID:nL9563005]
 "The euro weakened to the 1.30 (to the dollar) level, and
this triggered moves in regional currencies," a Prague trader
said.
                                
 The euro is the region's main reference currency. A weaker
euro can hit central Europe's currencies due to investors buying
euros to get dollars. [ID:nSP432469]
                                
 In Hungary, the forint <EURHUF=> lost 1.3 percent to bid at
290.46 per euro.
                                
 The Polish zloty <EURPLN=> slipped 1.2 percent lower to
4.485 per euro and the Romanian leu <EURRON=> shed 0.6 percent
to 4.255 to the euro.
                                
 Polish bonds were quiet on Tuesday, while in Hungary traders
said there were buyers mainly in longer papers ahead of a large
coupon payment on some of those papers on Feb 12.
                                
 Currencies had won back some gains in the past week but are
still heavily down since the start of the year, with the zloty
losing 8.25 percent and the forint 9.3 percent. The leu has
dropped 5.7 percent in that time and the crown 5 percent.
                                
 A slump in demand from the recession-hit euro zone has
punished central Europe's export-driven economies, prompting
central banks to ease monetary policy, which has added to
currencies' downward spiral.
                                
 The Czech central bank cut interest rates to a historic low
last week but signalled rates were near a bottom. Analysts have
said currency weakness will make the region's central banks more
cautious in cutting rates, but still expect rates to head lower.
                                
 Poland is set to cut again later this month due to falling
industrial output. [ID:nL9337295]
                                
 Romania's central bank governor said on Monday Romania has
cut the minimum reserve requirement for banks' leu liabilities
too soon, flooding the market with liquidity and putting
pressure on the leu currency. [ID:nL9449856]
                                
 "The leu is falling in line with the region, but with some
measure and with fear," said a dealer at a foreign bank in
Bucharest, referring also to central bank comments about the
need for exchange rate stability.
                                
 
----------------------MARKET SNAPSHOT-------------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2009 
Czech crown      <EURCZK=>   28.147   27.528  -2.2%     -4.95%
Polish zloty     <EURPLN=>    4.485    4.432  -1.18%    -8.25%
Hungarian forint <EURHUF=>  290.46   286.8    -1.26%    -9.26%
Croatian kuna    <EURHRK=>    7.43     7.42   -0.13%    -0.87%
Romanian leu     <EURRON=>    4.255    4.231  -0.56%    -5.65%
Serbian dinar    <EURRSD=>   92.15    92.15    0%       -2.9%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR   +5 basis points to  151bps over bmk*
4-yr T-bond   CZ4YT=RR   +6 basis points to  +122bps over bmk*
8-yr T-bond   CZ8YT=RR   +6 basis points to  +227bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR   +5 basis points to  +362bps over bmk*
5-yr T-bond   PL5YT=RR   +4 basis points to  +285bps over bmk*
10-yr T-bond PL10YT=RR   +3 basis points to  +232bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR   +12 basis points to  +937bps over bmk*
5-yr T-bond   HU5YT=RR    -3 basis points to  +10534bps over bmk*
10-yr T-bond   HU10YT=RR +5 basis points to  +669bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1104 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 Stephen Nisbet)