(Adds details, fixed income)
PRAGUE, Sept 15 (Reuters) - The Czech crown and Polish zloty
gave up early gains against the euro on Monday as market
watchers braced for turmoil after the bankruptcy filing by U.S.
bank Lehman Brothers and the sale of Merrill Lynch.
On Monday, Lehman Brothers filed for bankruptcy protection
in what is set to be the most high profile case of its type
since 1990, while Bank of America announced it would buy
brokerage Merrill Lynch.
The news sent the dollar tumbling against the euro, giving
the crown and zloty -- both seen as safe havens in the region --
a temporary boost before the currencies pulled back.
The euro is the main reference in the region, with dealers
often tracking the euro/dollar in trading.
"There's probably a little bit of uncertainty about how to
digest this news," said Stuart Bennet, global foreign exchange
strategist at Calyon. "I'm not sure the market has made its
decision yet."
The Czech crown <EURCZK=> surged more than 1 percent in
early trade to push below the key 24.00 per euro level for the
first time in a month. But by 0832 GMT was up 0.4 percent from
Friday's domestic close at 24.106 per euro.
Dealers had expected the move below 24 since the crown
jumped last week with the rest of the region on news that
neighbouring Poland was aiming to join the euro zone in 2011,
earlier than the market had expected.
In Poland, the zloty <EURPLN=> gave up early gains in Monday
trade to trade down 0.6 percent at 3.362 per euro, and dealers
said the market was also watching for August inflation and wages
data to be released later in the day.
The Hungarian forint <EURHUF=> was the leading faller in the
region, trading at 240.75 versus the euro, weaker than Friday's
closing quote of 238.58.
"We have renewed credit tensions (after Lehman). Therefore
the country with the biggest funding needs get the biggest
problems ... and Hungary has the biggest foreign debt," said
Lars Christensen, chief analyst at Danske Bank.
Concerns about an opposition motion to dissolve the
Hungarian parliament also weighed on the forint, dealers said
[].
In other trade, Romania's leu was bid at 3.62 per euro
<EURRON=>, compared with Friday's close of 3.603.
The market turmoil also hit bonds, with Hungarian and Polish
notes weakening in early trade after being propped up earlier.
"The rally in the Polish zloty is insulating the forint and
Hungarian bonds against global falls but that can only last so
long," a dealer said.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 24.106 24.203 +0.40% +9.02%
Polish zloty <EURPLN=> 3.362 3.342 -0.60% +6.62%
Hungarian forint <EURHUF=> 240.750 238.580 -0.91% +4.79%
Croatian kuna <EURHRK=> 7.106 7.103 -0.04% +3.01%
Romanian leu <EURRON=> 3.622 3.603 -0.53% -1.17%
Serbian dinar <EURRSD=> 76.320 76.290 -0.04% +3.10%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +19 basis points to 17bps over bmk*
5-yr T-bond CZ5YT=RR +21 basis points to +20bps over bmk*
10-yr T-bond CZ9YT=RR +17 basis points to +37bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +22 basis points to +263bps over bmk*
5-yr T-bond PL5YT=RR +26 basis points to +231bps over bmk*
10-yr T-bond PL10YT=RR +17 basis points to +185bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +22 basis points to +503bps over bmk*
5-yr T-bond HU5YT=RR +23 basis points to +483bps over bmk*
10-yr T-bond HU10YT=RR +19 basis points to +382bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1103 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet; editing
by David Stamp)
