* Fx, bonds gain slightly though mkts still wary on Greece
* Polish finmin says E.Europe more sheltered than eurozone
* Markets eye rate meetings next week
(Adds fixed income, detail, updates prices)
By Marius Zaharia
BUCHAREST, April 30 (Reuters) - Central European currencies
and bonds resumed a mild recovery early on Friday, with
investors still wary of a spillover threat from Greece, which
was seen closer to securing a multi-billion-euro aid package.
European Commission President Jose Manuel Barroso said on
Friday the package, crucial to avoid default, will be hammered
out within days, after Greece readied severe austerity measures
on Thursday providing some relief to markets. []
German politicians have said the aid package could be worth
100-120 billion euros over three years, against an original plan
for 45 billion euros of aid in 2010.
But dealers still warned any sign of hesitation from EU
officials will reignite the recent sell-off.
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.
However, Polish Finance Minister Jacek Rostowski said
eastern European countries are more sheltered than other nations
in Europe from risks of contagion, saying the average debt was
40 percent of GDP, half of that of euro zone members
[].
At 0954 GMT, the Polish zloty <EURPLN=>, the Romanian leu
<EURRON=> and the Hungarian forint <EURHUF=> were all up 0.1-0.2
percent from the previous close.
The Czech crown <EURCZK=> was 0.3 percent weaker. Dealers in
Bucharest said the weakening may be caused by unwinding of
positions built earlier this week when some investors looked for
intra-region safe havens during the sell-off.
Czech and Hungarian bond yields fell about 5 basis points
across the curve.
"People are happier about Greece, but on the other side I
don't see anything else being positive besides some statements,"
one dealer in Bucharest said.
Polish currency markets may also find support from the
initial public offering of the country's leading insurer PZU
[], where the price was set at the top of its range,
valuing it as Europe's biggest flotation this year.
[]
RATE MEETINGS
Markets also eyed U.S. first-quarter GDP figures at 1230
GMT, before getting ready for rate decisions in the Czech
Republic and Romania next week.
Rate cut talk has increased over the past weeks in the Czech
Republic, while in Romania the question is whether risks from a
spillover from Greece would increase cautiousness and sway the
central bank to slow down the easing pace to 25 basis points.
First-quarter data in the region were mixed, decreasing
initial expectations for rate hikes in the second half of the
year in the Czech Republic and Poland.
Analysts still see risks to the recovery coming from rising
unemployment and a high level of non-performing loans, which
will keep lending subdued.
Erste Group Bank <ERST.VI>, emerging Europe's third-largest
lender, said on Friday it expected the recovery to be slow and a
significant drop in bad debt will have to wait for the second
half. [].
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.527 25.45 -0.3% +3.1%
Polish zloty <EURPLN=> 3.906 3.909 +0.08% +5.07%
Hungarian forint <EURHUF=> 265.99 266.23 +0.09% +1.64%
Croatian kuna <EURHRK=> 7.26 7.246 -0.19% +0.68%
Romanian leu <EURRON=> 4.125 4.132 +0.17% +2.72%
Serbian dinar <EURRSD=> 99.14 99.32 +0.18% -3.29%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -5 basis points to 67bps over bmk*
7-yr T-bond CZ7YT=RR -5 basis points to +82bps over bmk*
10-yr T-bond CZ9YT=RR -4 basis points to +79bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -7 basis points to +439bps over bmk*
5-yr T-bond HU5YT=RR -6 basis points to +404bps over bmk*
10-yr T-bond HU10YT=RR -5 basis points to +365bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1254 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Marius Zaharia,
editing by Dtephen Nisbet)
