* Zloty falls more on euro hope reversal
* Investors book profit on stocks due to flu uncertainty
(Adds quote, details)
By Jason Hovet and Marius Zaharia
PRAGUE/BUCHAREST, April 27 (Reuters) - Poland's fading euro
hopes and a string of poor economic data weakened the zloty by
more than 2 percent on Monday, while worries over North
America's swine flu outbreak rattled investors who cut risk.
Governments around the world moved to contain the spread of
a flu virus that has killed more than a 100 people in Mexico and
has spread to the United States, Canada and Europe, and possibly
to Israel and New Zealand. []
The worry prompted investors in central Europe to book
profit on gains of 8-13 percent in the Czech, Polish, and
Hungarian stock markets over the past month. []
Poland's zloty <EURPLN=> led currency losses, falling 2.2
percent to 4.581 per euro as investors unwound trades where they
had bet long on the zloty against its regional peers. The unit
has shed 8.5 percent since hitting a 3-month high on April 15.
Data showed last week that Poland's budget gap exceeded the
EU's 3 percent ceiling and would likely do so again this year,
complicating government plans to swap zlotys for euros in 2012.
"The zloty has been falling significantly today ... because
of this story with the budget deficit, as everybody had expected
it to be at least below 3 percent and that has some implications
for the euro road map," said Nordea Bank's Anders Svendsen.
"They now have to implement stricter fiscal policy and that
is very negative in the current scenario, when it's not exactly
what the economy needs."
Data on Monday enhanced fears over a deepening economic
slowdown in Poland with retail sales falling and unemployment
rising. []
The Czech crown <EURCZK=> shed 0.1 percent to 26.627 per
euro by 1220 GMT, while the Hungarian forint <EURHUF> edged down
to 295.54 per euro. Romania's leu <EURRON=> rose 0.2 percent.
Bonds in Hungary and the Czech Republic eased.
A NEW BLOW
Analysts expect nearly all of the region's economies to
slide into recession this year due to falling demand for their
goods from western markets.
Global finance leaders meeting in Washington over the
weekend said a "break in the clouds" of the global economic
storm was appearing. []
But the threat of a flu pandemic only added to jitters of a
fragile economic recovery. The World Bank estimated last year
that a flu pandemic could cost the global economy $3 trillion.
[].
"The turn of events in Mexico again highlights the
particular vulnerability this year of the global economy to any
"natural" disasters," Cheuvreux emerging markets economist Simon
Quijano-Evans wrote in a morning note.
Currencies, led by the zloty, have fallen by up to a quarter
since record highs last summer as worries over banking stability
and weak manufacturing reversed investment flows, putting a
strain on policymakers.
Strategists expect pressure to remain despite 5-10 percent
gains since February lows as economic woes hit jobs and banks.
The Polish and Hungarian central banks said on Monday they
would continue foreign exchange swap agreements with the
European Central Bank and the Swiss National Bank until the end
of July. [] []
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.627 26.615 -0.05% +0.47%
Polish zloty <EURPLN=> 4.581 4.481 -2.18% -10.17%
Hungarian forint <EURHUF=> 295.54 295.42 -0.04% -10.82%
Croatian kuna <EURHRK=> 7.432 7.42 -0.16% -0.9%
Romanian leu <EURRON=> 4.22 4.23 +0.24% -4.87%
Serbian dinar <EURRSD=> 94.98 94.25 -0.77% -5.79%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +4 basis points to 178bps over bmk*
4-yr T-bond CZ4YT=RR +19 basis points to +208bps over bmk*
8-yr T-bond CZ8YT=RR +16 basis points to +298bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +3 basis points to +899bps over bmk*
5-yr T-bond HU5YT=RR +9 basis points to +846bps over bmk*
10-yr T-bond HU10YT=RR 0 basis points to +732bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1520 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
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(Reporting by Reuters bureaus, writing by Jason Hovet/Marius
Zaharia, editing by Toby Chopra)
