* FX down after recent rally
* Romania's c.bank seen cutting rates by 25 bps
* Poland's Q1 growth seen by officials at about 1 pct
(Adds detail, fixed income)
By Dagmara Leszkowicz
WARSAW, May 6 (Reuters) - Central European currencies
slipped behind the Polish zloty on Wednesday after a rally ran
up against a wall and investors cut back from riskier emerging
assets.
Romania's leu was slightly down before an expected quarter
percentage point interest rate cut later in the day. However,
the Czech crown found some relief in the unwinding of cross
trade versus the zloty.
The Polish unit <EURPLN=> fell 0.8 percent on the day to bid
at 4.403 against the euro by 0953 GMT, while the crown <EURCZK=>
edged 0.4 percent lower per euro.
Bourses in Prague and Warsaw, up nearly 1 percent, also
shook off a report late on Tuesday that Bank of America needs as
much as $34 billion in new capital. []
"There are concerns about these U.S. stress tests (on banks)
which did create a weaker backdrop for emerging Europe today,"
said UniCredit emerging strategist Martin Blum.
"The bottom line is a lot of these eastern European
currencies had rallied quite significantly in the previous few
weeks, and I think at these levels... it will prove increasingly
difficult to drive eastern European currencies stronger."
The zloty and Hungarian forint have led gains with almost 4
percent rises since April 27. Romania's leu <EURRON=> has gained
1.3 percent in that time, hitting a 3-week high on Tuesday.
RATE CUTS SEEN
Polish bonds tracked the currency and dealers said bonds are
falling before the switch tender due later in the day, where the
finance ministry will offer papers maturing in 2013 and 2015 in
exchange for bonds maturing in 2009. []
The forint <EURHUF=> traded 0.3 percent lower on Wednesday,
and the leu was a touch lower at 4.16 per euro. Analysts expect
Romania's central bank to cut rates by 25 basis points to 9.75
percent due to a shrinking economy.
The country, one of three European Union members that have
sought external aid in the global financial crisis, is expected
to get the first tranche from its stand-by loan from the
International Monetary Fund on Wednesday. []
Darker economic outlooks in central Europe, widening fiscal
gaps and easier monetary policies are set to keep pressure on
currencies in coming months, although strategists don't expect
the wide swings seen earlier this year that sent units crashing.
Elsewhere in the region the Czech central bank is expected
to cut interest rates a quarter point on Thursday. The crown has
underperformed the recent rally due to zloty cross plays,
dealers said.
"There are still crosses being played... and it looks like
zloty/crown is the main entertainment," one Prague-based dealer
said. "Some people were long zloty/crown, and with some bounce
in the dollar people will be selling zloty and buying crown."
Earlier on Wednesday, Michal Boni, a government minister and
an aide to Prime Minister Donald Tusk, said the country's growth
in the first three months of the year could be about 1 percent.
[]
Poland is battling a steep economic slowdown, but the
country is expected to fare better than its regional peers most
of which are seen facing contraction.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.72 26.62 -0.37% +0.12%
Polish zloty <EURPLN=> 4.403 4.369 -0.77% -6.54%
Hungarian forint <EURHUF=> 284.56 283.75 -0.28% -7.38%
Croatian kuna <EURHRK=> 7.404 7.405 +0.01% -0.53%
Romanian leu <EURRON=> 4.16 4.158 -0.05% -3.5%
Serbian dinar <EURRSD=> 94.73 94.72 -0.01% -5.54%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +4 basis points to 171bps over bmk*
4-yr T-bond CZ4YT=RR +4 basis points to +200bps over bmk*
8-yr T-bond CZ8YT=RR +18 basis points to +302bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -5 basis points to +413bps over bmk*
5-yr T-bond PL5YT=RR -3 basis points to +343bps over bmk*
10-yr T-bond PL10YT=RR -5 basis points to +297bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -26 basis points to +874bps over bmk*
5-yr T-bond HU5YT=RR -61 basis points to +803bps over bmk*
10-yr T-bond HU10YT=RR -51 basis points to +700bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1154 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
For related news and prices, click on the codes in brackets: All
emerging market news []
Spot FX rates Eastern Europe spot FX <EEFX=>
Middle East spot FX <MEFX=> Asia spot FX <ASIAFX=>
Latin America spot FX <LATAMFX=>
Other news and reports
World central bank news [] Economic Data Guide <ECONGUIDE>
Official rates [] Emerging Diary []
Top events [] Diaries [] Diaries Index []
(Reporting by Reuters bureaus, writing by Dagmara Leszkowicz,
editing by Stephen Nisbet))
