* FX down, following regions' falling stocks
* Worries on big dividend payout weighs on zloty
* Planned road bonds issuance in Poland affects debt
(Adds fixed income, detail)
By Dagmara Leszkowicz
WARSAW, Sept 18 (Reuters) - Poland's zloty led loses early
on Friday as global and regional stock markets fell into the
red, which dealers said indicated central European currencies
may continue their decline later in the day.
The zloty is also under pressure because of concerns that
Dutch-based Eureko [] -- which owns a 33 percent stake
in Polish insurer PZU -- would convert its part of a likely
dividend into euros and therefore weaken the currency.
Local media has that speculated PZU, eastern Europe's
largest insurer of which Warsaw owns 45 percent, would pay a
dividend of as much as 12 billion zlotys. []
"Any moves on the EUR/PLN are strongly correlated with
changes on the stock market," analysts at BRE bank in Warsaw
wrote in a note. "Additionally the case of a huge dividend
outflow still weighs on the market."
At 0844 GMT the zloty <EURPLN=> was 0.5 percent down and
traded at 4.147 against the euro.
Other currencies were also weaker with dealers saying they
were expecting a correction after Asian stocks retreated and
commodity prices dipped on Thursday's data which gave a
conflicting picture about the strength of the U.S recovery.
"Sentiment has turned slightly worse, so I think the forint
will easily weaken to 272.50 versus the euro, or possibly more,"
one Budapest-based dealer said.
The forint <EURHUF=> was 0.3 percent down to the euro, while
the Czech crown <EURCZK=> was 0.1 weaker to the euro early on
Friday, after it had hit its 9-months highs at 24.977 on
Thursday.
Dealers also said in the longer run there was still room for
zloty gains.
"The trend has not reversed -- we're still appreciating in
the longer term," said one Warsaw-based dealer.
ROAD BONDS
Polish bonds were also weaker, tracking the currency, but
dealers said it is also because Warsaw was planning to issue
bonds worth about 7 billion zlotys for financing road-building
projects this year.
"This is an alternative for traditional bonds so some
investors will probably decide to buy them," said Pawel
Bialczynski, dealer at BRE bank in Warsaw.
The next issue is due in October and is set to be conducted
by the state-owned BGK bank.
"It is weighing on the debt at some point as the market has
realised the debt supply would not be as trimmed as previously
announced," Bialczynski added.
On Wednesday the finance ministry said it is likely to scrap
long-term zloty bond issues until the end of 2009. The
information boosted the country's debt, with yields falling some
15 basis points across the curve.
Hungary's bonds also weakened on Friday and yields edged
about 5-7 basis points higher, tracking the forint.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.129 25.099 -0.12% +6.46%
Polish zloty <EURPLN=> 4.147 4.125 -0.53% -0.77%
Hungarian forint <EURHUF=> 271.64 270.96 -0.25% -2.98%
Croatian kuna <EURHRK=> 7.287 7.28 -0.1% +1.07%
Romanian leu <EURRON=> 4.264 4.259 -0.12% -5.85%
Serbian dinar <EURRSD=> 93.36 93.37 +0.01% -4.16%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +12 basis points to 202bps over bmk*
7-yr T-bond CZ7YT=RR +2 basis points to +176bps over bmk*
10-yr T-bond CZ10YT=RR +2 basis points to +185bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +1 basis points to +381bps over bmk*
5-yr T-bond PL5YT=RR +3 basis points to +342bps over bmk*
10-yr T-bond PL10YT=RR +2 basis points to +284bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +4 basis points to +610bps over bmk*
5-yr T-bond HU5YT=RR +3 basis points to +539bps over bmk*
10-yr T-bond HU10YT=RR +2 basis points to +456bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 0944 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Dagmara Leszkowicz;
Editing by Andy Bruce and Toby Chopra)
