* Fx fall after Romanian govt coalition collapses
* Crown breaks tech level, forint stuck near 270 vs EUR
* Hungarian bonds ease on risks after long rally
(Recasts with new comments, prices)
By Sandor Peto
BUCHAREST/BUDAPEST, Oct 1 (Reuters) - Central European
currencies fell on Thursday, pulled down by the leu as the
withdrawal of a party from Romania's ruling coalition was a
reminder of political risks to the recession-hit region.
The leu <EURRON=> fell 0.9 percent against the euro to 4.251
by 1401 GMT, even though dealers said Romania's central bank
intervened to support the currency after leftist coalition
partner Social Democrats resigned from the government.
The move which left the government in minority fuels concern
over Romania's ability to meet conditions of International
Monetary (IMF) fund aid. []
"The noise is bad for the currency, which hits people with
loans in FX, and it is bad for the fiscal picture as it makes
interest payments more expensive, especially as ratings agencies
are bound to take some action," Chevreux analyst Simon
Quijano-Evans said.
Other states in Central Europe, like Hungary and the Czech
Republic have also seen political turmoil this year.
[]
Manufacturing indices in the region showed a move closer to
recovery, but analysts warned of a possible double dip slowdown
on the horizon. []
The fresh turmoil in Romania adds to local risks to regional
assets, but the losses of Hungary's forint were milder as it
remained stuck near 270 against the euro, while the global
market sentiment remained supportive, dealers said.
The forint <EURHUF=>, which has traded around 270 for weeks,
shed 0.2 percent to 269.93. The crown <EURCK=> fell to a
two-week low, easing 0.7 percent against the euro to 25.436,
after breaking technical levels.
"There have been some stop losses, but it looks like the
(euro) buying interest will continue," a dealer said, adding
that a break above 25.350 pushed the currency toward 25.5 for
the first time since mid-September.
Poland's zloty <EURPLN=> weakened by 0.8 percent to 4.247,
after central bank rate setter Andrzej Wojtyna said there was no
reason for the zloty to appreciate in the coming quarters.
[]
Stocks were mixed in the region, with Budapest's and
Prague's key equity indices moving sideways, while Poland's
<> firmed two percent.
HUNGARIAN BONDS EASE
Political jitters make it harder for governments in the
region to fight a rise in budget deficits increased by deep
recession, or drastic slowdown in the case of Poland.
Stocks, currencies and bonds in the region have rallied from
lows early this year as appetite for risk grew in the world.
But investors ponder whether the rallies have gone too far
in light of cuts in central bank interest rates in the region
and still existing risks over the global market sentiment.
Government bonds eased in Hungary, with yields rising by
five basis points at the short end of the curve and 10 basis
points at the long end, after a half percentage point cut in the
Hungarian central bank's base rate to 7.5 percent on Monday.
"Everybody prefers neutral positions as the rate cuts are
positive but investors fear that if buyers disappear, yields can
suddenly jump by even 50 basis points," one Budapest-based
dealer said. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.436 25.264 -0.68% +5.18%
Polish zloty <EURPLN=> 4.247 4.212 -0.82% -3.11%
Hungarian forint <EURHUF=> 269.93 269.46 -0.17% -2.36%
Croatian kuna <EURHRK=> 7.257 7.26 +0.04% +1.49%
Romanian leu <EURRON=> 4.251 4.213 -0.89% -5.57%
Serbian dinar <EURRSD=> 93.01 92.96 -0.05% -3.8%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +2 basis points to 159bps over bmk*
7-yr T-bond CZ7YT=RR +4 basis points to +182bps over bmk*
10-yr T-bond CZ10YT=RR +4 basis points to +176bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR 0 basis points to +388bps over bmk*
5-yr T-bond PL5YT=RR 0 basis points to +335bps over bmk*
10-yr T-bond PL10YT=RR 0 basis points to +303bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +5 basis points to +544bps over bmk*
5-yr T-bond HU5YT=RR +10 basis points to +516bps over bmk*
10-yr T-bond HU10YT=RR +10 basis points to +464bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1601 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet/Sandor
Peto; Editing by Toby Chopra and Chris Pizzey)
