CEE MARKETS 3-FX down on U.S bank plan, risk aversion

                                
 (Recasts with new comments, prices.)
                                
 By Dagmara Leszkowicz and Sandor Peto
                                
 BUDAPEST/WARSAW, Feb 11 (Reuters) - Emerging European assets
slipped on Wednesday after a U.S. bank rescue plan disappointed
investors, increasing the aversion of risk, while Polish FX
options and Czech output data added to downward pressures.
                                
 At 1435 GMT the Polish zloty <EURPLN=> was 2.69 percent
weaker against the euro at 4.571, while the forint <EURHUF=> and
the crown <EURCZK=> were down 2.24 percent and 1.17 percent
respectively, at 295.06 and at 28.55.
                                
 The currencies rebounded earlier this week after steep falls
last week, but a bout of appetite for risk ended late on Tuesday
because a U.S. plan to bail out banks caused disappointment and
led to a fall in stock prices in the world.
                                
 Government bonds and equities in Central Europe also fell.
                                
 "The U.S. programme for supporting the economy was not very
well received which boosted risk-aversion which in turn led to
an outflow of funds from emerging markets," said Krzysztof
Izdebski, a fixed income trader at PKO BP bank in Warsaw.
                                
 "However (the outflow) is not that big as the liquidity on
the market is not high," he added.
                                
 A rise in risk aversion hurts central European assets as the
global crisis has hit hard the region's export-heavy economies,
and central banks in the region have been cutting interest
rates.
                                
 The currency slide in the past months have caused concerns,
for example over foreign currency loans in Hungary, but central
banks remain under pressure to cut rates and help exporters or
risk that investors will become increasingly pessimistic over
the region.
 In the Czech Republic, data showing industrial output
contracted 14.6 percent year-on-year in December confirmed that
the region's economies slow down drastically or slide into
recession. [ID:nPRA002365].
                                
 
                                
 ZLOTY UNDER PRESSURE
                                
 The zloty is under additional pressure because companies
continue to close option deals struck last year when the zloty
was much stronger and are now forced to realize huge losses.
                                
  On Tuesday the country's Economy Minister Waldemar Pawlak,
who heads the junior party in the ruling coalition, said he
would propose a law at a government meeting next week to allow
companies to walk away or renegotiate the terms of their
outstanding contracts with banks.[ID:nLA326949]
                                
 However some dealers said the plan is likely to fail because
scrapping these transactions may no be possible.
                                
 Polish Deputy Finance Minister Ludwik Kotecki said the zloty
was likely to gain in the months ahead[ID:nWAR007894].
                                
 A Polish rate-setter said the central bank may lower minimum
reserve requirements for banks as interest rate cuts so far have
benefited the economy little and weakened the zloty.
[ID:nLB865037]
                                
 But analysts in a Reuters poll said relief for the region's
currencies is unlikely in the next months and that any recovery
later would be slow.[ID:nL5155423]
  ----------------------MARKET SNAPSHOT-------------------------
 Currency                    Latest   Previous Local    Local
                                
                                   close    currency currency
                                
                                            change   change
                                
                                            today    in 2009 
 Czech crown      <EURCZK=>  28.55    28.215   -1.17%    -6.29%
 Polish zloty     <EURPLN=>   4.571    4.448   -2.69%    -9.98%
 Hungarian forint <EURHUF=> 295.06   288.44    -2.24%   -10.68%
 Croatian kuna    <EURHRK=>   7.43     7.423   -0.09%    -0.87%
 Romanian leu     <EURRON=>   4.281    4.243   -0.89%    -6.23%
 Serbian dinar    <EURRSD=>  93.028   92.361   -0.72%    -3.81%
                                
 Yield Spreads
 Czech treasury bonds <0#CZBMK=>
 2-yr T-bond   CZ2YT=RR    -2 basis points to  159bps over bmk*
 4-yr T-bond   CZ4YT=RR   +9 basis points to  +134bps over bmk*
 8-yr T-bond   CZ8YT=RR   +2 basis points to  +236bps over bmk*
 Polish treasury bonds <0#PLBMK=>
 2-yr T-bond   PL2YT=RR   +3 basis points to  +363bps over bmk*
 5-yr T-bond   PL5YT=RR   +7 basis points to  +292bps over bmk*
 10-yr T-bond PL10YT=RR   +8 basis points to  +246bps over bmk*
 Hungarian treasury bonds <0#HUBMK=>
 3-yr T-bond   HU3YT=RR  -19 basis points to  +936bps over bmk*
 5-yr T-bond   HU5YT=RR  -51 basis points to  +848bps over bmk*
 10-yr T-bond  HU10YT=RR -38 basis points to  +681bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1535 CET.
Currency percent change calculated from the daily domestic 
close at 1600 GMT.
                                
 For related news and prices, click on the codes in brackets:
All emerging market news [EMRG] 
Spot FX rates Eastern Europe spot FX <EEFX=>    
Middle East spot FX <MEFX=> Asia spot FX <ASIAFX=>       
Latin America spot FX <LATAMFX=> 
Other news and reports   
World central bank news [CEN]  Economic Data Guide <ECONGUIDE>
Official rates [GLOBAL/INT]  Emerging Diary [EMRG/DIARY]  
Top events [M/DIARY]  Diaries [DIARY] Diaries Index [IND/DIARY] 
                                
 (Reporting by Reuters bureaus, Writing by Sandor
Peto/Dagmara Leszkowicz; Editing by Ruth Pitchford/Victoria
Main)