* FX weaker, tracking stocks, euro; Polish 10-yr bonds down
* Zloty may notch up longer-term gains
* BNP Paribas recommends selling crown
* Bulgarian stocks rise on election result
(Updates throughout)
By Dagmara Leszkowicz and Marius Zaharia
WARSAW/BUCHAREST, July 6 (Reuters) - Central European
currencies fell on Monday hit by weaker regional stocks and a
shift in global mood, while Polish long-term bonds ticked lower
after a switch tender announcement.
Currencies hit multi-month highs last week during a rally
driven by a strong current account figure in Hungary,
encouraging Purchasing Managers' Indices throughout the region
and an overall improvement in global sentiment.
But the trend then ran out of steam, affected by falls in
regional stocks which began last Thursday and continued on
Monday, with Warsaw's WIG20 <.WI20> and Budapest BUX <> each
losing more than 1 percent.
At 1312 GMT the zloty <EURPLN=> fell 0.9 percent against the
euro, Hungary's forint <EURHUF=> dropped 0.7 percent, Romania's
leu <EURRON=> was stable, while the crown <EURCZK=> fell 0.2
percent with Czech markets shut for a national holiday.
"We had a little profit-taking today, as some investors
closed their long position in the zloty due to a worse sentiment
on the global stock market," said one Warsaw-based dealer. "It
affects both the zloty and the forint."
In debt markets, long-term Polish bonds weakened after the
finance ministry said it will offer PS0414 bonds due 2014 and
DS1019 bonds due 2019 at a switch tender on Wednesday in
exchange for papers due this year. []
"Previously when the finance ministry said it would not
offer 10-year bonds in July, some part of the market assumed it
would not offer these paper on any tender, not only primary
ones," said Pawel Bialczynski, dealer at BRE bank in Warsaw.
Poland's finance ministry said the government should raise
its 2009 borrowing needs by 8 billion zlotys. []
Poland plans to sell a 10-year dollar bond, one of the banks
managing the sale said. []
Hungarian bond yields edged higher in line with the forint's
weakening.
ZLOTY SEEN OUTPERFORMING
BNP Paribas recommended on Monday selling the euro against
the Czech crown, betting on further interest rate cuts as
exporters come under pressure from the unit's recent strength.
[]
Dealers said Hungary's forint may come under some additional
short-term pressure because of a Deutsche Bank note referring to
its recent outperformance against the Polish currency and
Hungary's high government debt levels.
The Deutsche Bank analysts also said they had closed their
long EUR/PLN recommendation, which may provide some support for
the Polish unit. The zloty is seen outperforming over a 12-month
horizon also in a Reuters poll [].
The only bourse gaining was Bulgaria's <.SOFIX>, which added
0.5 percent on the day, following election results taken as a
positive signal by markets, as a relatively clear-cut outcome
boosted hopes for a quick forming of a coalition. []
"The election results are positive in two respects," Citi
said in a note. "First, it looks like the risks of a highly
fragmented parliament and a prolonged period of tough
negotiations have not materialised."
"Second, given GERB's willingness for an IMF program, among
other things, a strong government led by GERB should be well
received by the markets."
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.926 25.864 -0.24% +3.19%
Polish zloty <EURPLN=> 4.39 4.351 -0.89% -6.26%
Hungarian forint <EURHUF=> 274.55 272.52 -0.74% -4.01%
Croatian kuna <EURHRK=> 7.32 7.334 +0.19% +0.61%
Romanian leu <EURRON=> 4.204 4.205 +0.02% -4.51%
Serbian dinar <EURRSD=> 93.07 93.257 +0.2% -3.86%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +4 basis points to 142bps over bmk*
4-yr T-bond CZ4YT=RR +22 basis points to +191bps over bmk*
8-yr T-bond CZ8YT=RR +12 basis points to +313bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +3 basis points to +396bps over bmk*
5-yr T-bond PL5YT=RR +9 basis points to +334bps over bmk*
10-yr T-bond PL10YT=RR +10 basis points to +300bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +9 basis points to +797bps over bmk*
5-yr T-bond HU5YT=RR +15 basis points to +719bps over bmk*
10-yr T-bond HU10YT=RR +4 basis points to +605bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1612 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
and Marius Zaharia; Editing by Toby Chopra)
