* Zloty slides amid weak global mkts, data boosts crown
* Regional assets seen under continued pressure
* Hungarian bonds repriced, rate cut seen less likely
(Adds detail, bonds, updates markets)
By Marton Dunai
BUDAPEST, May 7 (Reuters) - The Polish zloty suffered steep
losses on Friday, tracking a plunge in global financial markets,
but a string of upbeat economic data from the Czech Republic
boosted the Czech crown.
Sentiment across central Europe was depressed as European
shares and the euro hit fresh lows after a sell-off on Wall
Street on Thursday exacerbated worries over a euro zone debt
crisis and G7 finance ministers gathered for a summit.
[]
"Most Central and Eastern European currencies remain
pressured, with the zloty and forint taking the hardest
beating," Danske Bank wrote in a morning note. "We believe that
the short-term sentiment will remain negative on CEE
currencies."
"If the European sovereign debt crisis worsens ... CEE
currencies might very well overshoot in a similar fashion as
during early 2009."
The zloty <EURPLN=> fell to a six-month low of 4.24 against
the euro overnight and although it recovered some ground on
Friday morning it was still 0.5 percent off late Thursday's
levels as investors waited for positive signals out of Greece.
"This is a shock. The zloty's fall was caused by the fall on
New York markets. But it's a positive sign that Greece approved
spending cuts," said Andrzej Bowtruczuk, dealer at BRE Bank.
As stock markets region-wide recorded losses of around 2
percent, the Hungarian forint <EURHUF=> was flat by 0942 GMT,
while the Czech crown <EURCZK=> added 0.9 percent.
The crown is the only currency in CEE3 -- comprising the
zloty, forint and crown, the region's most liquid currencies --
to have recorded gains this year as the zloty and the forint
moved into negative territory this week.
The Czech economy showed signs of resilience as a host of
indicators published on Friday, including retail sales and
industry output, beat market expectations. Exports and imports
were both sharply higher. []
"The recovery in growth of retail sales signal a positive
turnaround in household consumption," said ING senior economist
Vojtech Benda. "The GDP growth is thus standing on two legs."
Still, even Czech assets could come under pressure as Greece
and the euro zone continue to weigh.
"There is global uncertainty, and we see many investors
withdrawing from emerging markets," a Prague dealer said.
Romania's leu <EURRON=> was 0.2 percent stronger, but
dealers said that strength had little to do with favourable
industrial output data [], and was more likely the
result of central bank intervention in support of the leu.
"Romania is not a safe haven," one dealer said. "It must be
the central bank."
The stock market <> has shed 13 percent this week while
the leu edged 1.3 percent lower.
Friday trade will be volatile, a trader in Budapest said,
adding that likely positive U.S. non-farm payrolls data, due
later in the day, would be offset by euro zone worries.
"There might be some consolidation by the end of the day,"
he said. "I can imagine people closing positions and the market
calming, but that might easily turn out to be wishful thinking."
BONDS
Hungarian bond yields were sharply higher on Friday as
investors were repricing the country's debt. Short-end yields
rose 140 basis points this week, and longer maturities added
more than a percentage point as well.
"The market is seeking new levels now, new realistic
levels," a dealer in Budapest said, adding that further yield
rises were possible and that the market had begun to price out
further central bank rate cuts.
Czech yields were stable but slightly higher on the short
end. Investors stepped back and trading was very illiquid,
traders said.
Polish debt eased slightly.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.99 26.2 2 +0.88% +1.26%
Polish zloty <EURPLN=> 4.167 4.145 -0.53% -1.51%
Hungarian forint <EURHUF=> 281.85 281.73 -0.04% -4.08%
Croatian kuna <EURHRK=> 7.264 7.259 -0.07% +0.62%
Romanian leu <EURRON=> 4.184 4.191 +0.17% +1.28%
Serbian dinar <EURRSD=> 99.667 99.58 -0.09% -3.8%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR 0 basis points to 113bps over bmk*
7-yr T-bond CZ7YT=RR -3 basis points to +118bps over bmk*
10-yr T-bond CZ9YT=RR +4 basis points to +114bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -2 basis points to +427bps over bmk*
5-yr T-bond PL5YT=RR +2 basis points to +384bps over bmk*
10-yr T-bond PL10YT=RR +5 basis points to +314bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -38 basis points to +618bps over bmk*
5-yr T-bond HU5YT=RR -53 basis points to +570bps over bmk*
10-yr T-bond HU10YT=RR -41 basis points to +486bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1142 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaux, writing by Marton Dunai;
Editing by Susan Fenton)
