* Crown extends gains, other FX down a touch from highs
* Stocks weaker, bond yields rise as markets take a breather
* Greece watched, but CEE has stayed resilient
(Adds bonds, updates prices)
PRAGUE/BUDAPEST, March 19 (Reuters) - The Czech crown firmed
on Friday and held near multi-month highs with peers in the
region as new worries over Greece's debt failed to dent appetite
for emerging Europe's assets.
Improving economic outlooks for central Europe and the
region's lower debt levels have pushed many investors to take
long positions in the region while concern over debt in euro
zone periphery states rattles euro markets.
The Polish zloty <EURPLN=> and Hungary's forint <EURHUF=>
shot to 15-month highs this week, while the crown jumped to a
five-month peak on Thursday.
Analysts say the region still has space to advance in the
coming sessions, even though the currencies have firmed well
past short-term forecasts in a Reuters poll of analysts
conducted just two weeks ago. <CEEFXPOLL01>
Concern that Greece might turn to the International Monetary
Fund for aid soured sentiment somewhat this week, also weakening
the region's reference currency, the euro <EUR=>.
The region has been mostly immune to Greece's woes, but
dealers said the situation there was still a risk to central
Europe's markets.
Hungary's forint <EURHUF=> gained about 0.8 percent and the
Czech crown <EURCZK=> half a percent against the euro this week
as investors closed long zloty positions against the two
currencies.
The units have trailed the zloty, which has strengthened
more than 5.5 percent this year.
By 1525 GMT on Friday, the crown firmed 0.3 percent on the
day, the forint eased 0.4 percent, while the zloty shed 0.2
percent and the Romanian leu <EURRON=> 0.1 percent.
CENTRAL BANKS WATCHED
Dealers said the forint has more room to extend gains ahead
of the Hungarian central bank's March 29 meeting, expected to
bring interest rates further down from a record low of 5.75
percent.
"Speculation probably strengthened the forint," one
Budapest-based trader said. "Those who play on rate cuts in
interest rate products want to push the (NBH) to cut rates.
"Forint levels around 260 would not be good for exporters
and the central bank must take that into account."
Policy makers in the region have warned recently that steep
currency firming could harm exports and stifle recovery.
Polish central banker Anna Zielinska-Glebocka said this week
that zloty gains could postpone tightening of interest rates
this year. []
"For policymakers, the main problem is the pace of the
appreciation more than the appreciation itself," Societe General
said in a note to clients.
"Verbal intervention should be the preferred tool to tame
upside pressures in the near-term," SocGen analysts added. "If
that is not enough the interest rate could be used."
The Czech central bank also holds a rate-setting meeting on
March 25, where rates are expected to remain on hold.
The crown would likely appreciate more ahead of the meeting,
Erste bank said in a note, adding that risk appetite could sour
if the EU pushed Greece to seek IMF help rather than help within
the euro bloc.
"We would not be surprised to see the CZK attacking 25
pretty soon and the CNB making it clear that anything stronger
will be resisted," Erste said.
Hungarian debt yields, which rallied to five-year lows in
the past weeks due to rate cut expectations and tight primary
supply, gave back some ground in lacklustre trading on Friday, a
dealer said.
Polish yields also rose slightly.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.333 25.42 +0.34% +3.89%
Polish zloty <EURPLN=> 3.887 3.878 -0.23% +5.58%
Hungarian forint <EURHUF=> 263.27 262.32 -0.36% +2.69%
Croatian kuna <EURHRK=> 7.256 7.257 +0.01% +0.73%
Romanian leu <EURRON=> 4.079 4.075 -0.1% +3.88%
Serbian dinar <EURRSD=> 99.52 99.49 -0.03% -3.66%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +2 basis points to +90bps over bmk*
7-yr T-bond CZ7YT=RR -1 basis points to +117bps over bmk*
10-yr T-bond CZ10YT=RR +2 basis points to +104bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR 0 basis points to +381bps over bmk*
5-yr T-bond PL5YT=RR +1 basis points to +309bps over bmk*
10-yr T-bond PL10YT=RR +2 basis points to +249bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR 0 basis points to +477bps over bmk*
5-yr T-bond HU5YT=RR +1 basis points to +430bps over bmk*
10-yr T-bond HU10YT=RR +2 basis points to +399bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1625 CET.
Currency percent change calculated from the daily domestic
close at 1700 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/Sandor
Peto and Marton Dunai; Editing by Susan Fenton/Ruth Pitchford)
