CEE MARKETS 2-FX down on Fitch downgrades. grim growth outlook

                                
 WARSAW, Nov 10 (Reuters) - Hungary's forint and Romania's
leu eased against the euro on Monday after ratings agency Fitch
cut both countries' ratings in a broad negative move on emerging
markets that hurt sentiment toward central European currencies.
                                
 Fitch cut Romania to "junk" status nearly two weeks after a
Standard & Poor's downgrade turned Romania into the only
European Union member with a non-investment grade credit rating
[ID:nHKG303288].
                                
 The agency also cut it ratings and outlook for a swathe of
other emerging market economies after a month in which investors
have cashed in investments in the sector due to worries over
their ability to draw in capital and fund debt.
                                
 At 1012 GMT the forint <EURHUF=> was 0.7 down to the euro at
2678.4, and the Romanian leu <EURRON=> weakened 0.5 percent to
the euro at 3.74. 
                                
 The Czech crown <EURCZK=> fell 0.6 percent to 25.22 per euro
after October inflation and jobless data pointed to more
interest rate cuts [ID:nLA198270]. Poland's zloty <EURPLN=>
bucked the trend, gaining 0.6 percent to 3.63 per euro in
volatile trade.
                                
 "The leu is falling because of the Fitch downgrade," said
one dealer with a Bucharest bank.
                                
 "But based on the S&P experience, regional sentiment will be
more important in the near future and if emerging markets
currencies firm, the leu will relate to them." 
                                
 Fitch said Hungary's downgrade to BBB from BBB-plus was due
to the likely severity of a recession and post-crisis
correction, related risks to public finances and foreign
currency mismatches in the private sector [ID:nHKG303288].
                                
 Monday's ratings downgrade on Hungary follows a similar move
by Moody's last Friday [ID:nL7629459] as the financial crisis
spilled over into central Europe, raising concerns over external
financing needs and battering markets in October.
                                
 A $25 billion Hungarian deal with the International Monetary
Fund and European Union helped calm some nerves in the last week
or so, although increasingly grim economic outlooks are weighing
on the region.
                                
 The Czechs last week slashed interest rates by 75 basis
points as global central banks respond to mounting economic
stress.
                                
 "The general trend is still weakening," a Prague trader
said.
                                
 In other trade, Serbia's dinar <EURRSD=> dipped to 85.18 to
the euro. Serbia is another country that has gone to the IMF for
possible aid.
                                
 Central European bourses opened stronger with Warsaw WIG20
<.WIG20> and Prague's PX <.PX> gaining more than 3 percent,
tracking global gains.
                                
 Bonds markets were little changed with dealers saying trade
was at a minimum. Czech dealers said the inflation and jobless
data did not affect bond prices.
                                
 "The market seems to have stabilised," said a Prague-based
bond dealer, although he added market makers were still mostly
not quoting in a market that has seized up over the last month.
                                
 
----------------------MARKET SNAPSHOT-------------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2008 
Czech crown      <EURCZK=>   25.217   25.077  -0.56%   +4.83%
Polish zloty     <EURPLN=>    3.632    3.653  +0.57%   -0.87%
Hungarian forint <EURHUF=>  268.400  266.490  -0.72%   -6.15%
Croatian kuna    <EURHRK=>    7.135    7.139  +0.06%   +2.61%
Romanian leu     <EURRON=>    3.744    3.724  -0.54%   -4.58%
Serbian dinar    <EURRSD=>   85.180   84.847  -0.39%   -8.15%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond   CZ3YT=RR    -3 basis points to  130bps over bmk*
5-yr T-bond   CZ5YT=RR    -3 basis points to  +143bps over bmk*
10-yr T-bond   CZ9YT=RR    -3 basis points to  +88bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR    -4 basis points to  +362bps over bmk*
5-yr T-bond   PL5YT=RR    -17 basis points to  +332bps over bmk*
10-yr T-bond PL10YT=RR    -14 basis points to  +260bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR   -48 basis points to  +1003bps over bmk*
5-yr T-bond   HU5YT=RR   -58 basis points to  +952bps over bmk*
10-yr T-bond   HU10YT=RR +3 basis points to  +590bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1112 CET.
Currency percent change calculated from the daily domestic 
close at 1500 GMT.
                                
 
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 (Reporting by Reuters bureaus, Writing by Dagmara
Leszkowicz)