* FX ease led by zloty, forint; politics hold leu down
* Crown near levels seen before rate cut talk started
* Polish debt tender awaited
(Adds bonds, details)
By Jason Hovet
PRAGUE, Nov 10 (Reuters) - Central Europe's currencies
mostly retreated on Tuesday, led by the Polish zloty after the
dollar came off lows, although analysts expect the region has
shaken off recent weakness.
Currencies have been slow to win back losses from September
and October, though dealers said firming could continue on
dollar weakness that has boosted risk appetite along with some
signs of economic improvement in hard-hit emerging Europe.
In Hungary, the forint <EURHUF=> slipped 0.1 percent from
the previous close to 271.34 to the euro, and the Polish zloty
<EURPLN=> lost 0.2 percent to 4.202 to the euro by 1058 GMT.
The Czech crown <EURCZK=> was up a touch at 25.523 per euro
after lagging 1 percent gains in the region on Monday.
"We keep watching the euro/dollar at the moment... so we are
seeing a small correction in the region," a Prague dealer said.
Only the Romanian leu <EURRON=> has been held back by
dragging political uncertainty as Romania's new prime minister
designate Liviu Negoita moves to form a government that analysts
give little chance of winning parliamentary support.
Negoita unveiled a cabinet line-up on Monday in the hope of
ending a month-long political crisis. [] The leu on
Tuesday hovered on the strong side of 4.30 per euro where it has
clung to throughout the more than month-long political haggling.
RETURN TO FIRMING
Hungary's forint is 2.8 percent weaker after hitting a 2009
high in mid-October, and the zloty is 0.8 percent off since the
start of September.
But both currencies have gained 1 percent this month, while
the crown is up 4 percent and has reversed its weakening since
the central bank narrowly voted not to cut interest rates last
week as many in the market had bet.
"The picture is now turning back towards more risk-taking
again after a stream of better-than-expected U.S. macro data and
renewed commitment on the part of global policymakers to
continue to pump liquidity into global financial markets,"
Danske Bank said.
"We therefore call an end to the correction in the EMEA
FX markets -- at least for now."
The Czech unit is already near levels seen at the end of
September before the central bank governor Zdenek Tuma and his
deputy began speaking in favour of policy easing.
"Speculators may play the CNB indecisiveness story now and
can try how much the board withstands in case of the koruna
strengthening," CSOB said. "Hence we would not be surprised with
the koruna moving around 25.00 EUR/CZK in the near future."
Czech bonds have also gained back some losses from the past
week, supported by currency firming like in other central
European debt markets. But analysts have been less bullish on
central European debt after sharp tightening of yields.
Hungarian bonds firmed on Tuesday, supported by monetary
easing expectations. Polish markets waited for a 2-year tender.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.523 25.535 +0.05% +4.82%
Polish zloty <EURPLN=> 4.202 4.192 -0.24% -2.07%
Hungarian forint <EURHUF=> 271.34 271.05 -0.11% -2.87%
Croatian kuna <EURHRK=> 7.272 7.272 0% +1.28%
Romanian leu <EURRON=> 4.294 4.297 +0.07% -6.51%
Serbian dinar <EURRSD=> 93.843 93.8 -0.05% -4.65%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +3 basis points to 108bps over bmk*
7-yr T-bond CZ7YT=RR +4 basis points to +111bps over bmk*
10-yr T-bond CZ10YT=RR +5 basis points to +99bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +4 basis points to +368bps over bmk*
5-yr T-bond PL5YT=RR +6 basis points to +323bps over bmk*
10-yr T-bond PL10YT=RR +4 basis points to +284bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +8 basis points to +532bps over bmk*
5-yr T-bond HU5YT=RR +11 basis points to +464bps over bmk*
10-yr T-bond HU10YT=RR +5 basis points to +405bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1158 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet; Editing
by Andy Bruce)
