* Zloty reverses from 13-mo high, helps crown
* Bonds, stocks dip, Warsaw's WIG20 down 3 pct
* Strategists still bullish, not over-worried by "PIIGS" woes
(Adds Hungary bonds, updates prices)
By Dagmara Leszkowicz and Jason Hovet
WARSAW/PRAGUE, Feb 5 (Reuters) - Warsaw stocks recorded
their sharpest fall in five months on Friday, and the zloty
weakened with escalating worries about debt in the euro zone
periphery hanging over emerging Europe.
Fears have spread that heavily indebted euro zone countries
like Greece, Portugal and Spain may be unable to cope with the
fiscal and monetary demands of membership, cutting appetite for
emerging Europe's riskier assets.
The Polish zloty has lost 3 percent since hitting a 13-month
peak this week, falling more than others due to fast gains last
month.
Like its peers, the zloty got a short-lived boost from a
mixed set of U.S. jobs data on Friday, which showed unemployment
in the world's largest economy had dipped to a five-month low,
before slipping back into the red. []
By 1624 GMT, the zloty <EURPLN> had lost 0.4 percent against
the euro, to bid at 4.089.
Warsaw's blue-chip index <> fell almost 4 percent to
its lowest since November, leading more than 2 percent falls in
central Europe. Prague's bourse <> hit a 6-month low in
trading volumes that doubled the past year's daily average.
Bond markets were also hurt, with the Polish paper yields
rising some 5 basis points across the curve. The Hungarian
10-year bond yield rose 20 basis points to a five-week high and
widening the spread over three-year bond yields.
"The zloty had rallied the most backed by the risk appetite
before problems in the euro zone emerged," said Bartosz
Pawlowski, FX strategist at BNP Paribas.
"That's why it's losing the most now."
The zloty's fall partly helped push the Czech crown
<EURCZK=> up 0.6 percent on the day.
It was a result of traders unwinding positions in which they
had bet against the crown in favour of the zloty. That popular
cross trade has helped fuel some of the Polish unit's rise since
around mid-2009 and partially prevented crown appreciation.
The Polish unit has been tapped as an outperformer this
year. [] <CEEFXPOLL01> But Greece worries have hit
the euro, central Europe's reference currency, eliminating most
of central European currency gains since the start of the year.
TEMPORARY PRESSURE
Emerging Europe is battling its own rise in fiscal deficits,
but analysts said the region was still better placed than some
of the euro zone's southern members.
"As these concerns are not going to decrease near-term,
there is probably still some downside pressure coming in the
next few sessions," Societe Generale emerging market strategist
Murat Toprak said.
"We haven't changed our directional positive bias, so we
maintain a long exposure on risk and on these (CEE) currencies."
Central Europe's economies are pulling out of deep
contractions and are seen posting modest growth this year.
Hungary's industrial output posted its first annual rise in
a year in December, but disappointed with its biggest monthly
fall in 16 months on sluggish export recovery. []
Hungary's forint <EURHUF=> hovered at 273.5 per euro. The
Romania leu <EURRON=> was steady but is down 1.5 percent from
its own 13-month high hit this week.
The strong dollar has the been the main drag on currencies.
The region's dollar crosses were at their weakest since summer.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 26.101 26.268 +0.64% +0.83%
Polish zloty <EURPLN=> 4.089 4.073 -0.39% +0.37%
Hungarian forint <EURHUF=> 273.51 273.59 +0.03% -1.16%
Croatian kuna <EURHRK=> 7.314 7.317 +0.04% -0.07%
Romanian leu <EURRON=> 4.133 4.133 0% +2.53%
Serbian dinar <EURRSD=> 98.74 98.62 -0.12% -2.9%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +5 basis points to 110bps over bmk*
7-yr T-bond CZ7YT=RR +3 basis points to +151bps over bmk*
10-yr T-bond CZ10YT=RR +4 basis points to +140bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +15 basis points to +571bps over bmk*
5-yr T-bond HU5YT=RR +24 basis points to +533bps over bmk*
10-yr T-bond HU10YT=RR +22 basis points to +483bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1726 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaus, Writing by Dagmara Leszkowicz;
Editing by Toby Chopra)
