* FX off lows, under pressure as investors cut risk exposure
* Stocks lose around 1 percent, track peers
* Czech bonds firmer, Polish stable before CPI
(Adds crown quote, updates prices)
By Jason Hovet
PRAGUE, March 15 (Reuters) - Central European currencies
recovered some ground in morning trade on Tuesday but remained
under pressure after an overnight drop as Japan's nuclear crisis
drove selling of riskier assets globally. []
Stock markets in emerging Europe lost as much as 2.4
percent. The Polish zloty led currency losses, bid down 0.5
percent and just off a 3-1/2 month low hit before the opening.
"Fear of further damage at the Japanese nuclear plants is
causing investors to close their positions on emerging markets,"
said Robert Kesicki, a Warsaw-based FX dealer at Kredyt Bank.
"Apart from the zloty, the forint is also weakening. I think
the zloty will stay in a 4.02-4.10 per euro range today."
By 1056 GMT, the zloty was bid at 4.056 to the euro. In
Hungary, where local markets are closed, the forint <EURHUF=>
lost 0.5 percent from Monday's European close.
The Czech crown <EURCZK=>, a usual safe haven play within
emerging Europe, and Romanian leu <EURRON=> lost 0.1 percent.
Warsaw stocks <> fell up to 2 percent, led by copper
miner KGHM <KGHM.WA> as commodity prices dropped.
ADDS TO PRESSURE
The market and economic uncertainty following the Japanese
earthquake has added to the pressure seen on central European
currencies in recent weeks as the outlook for monetary policy
tightening across the region blurs. []
[]
While Czech bond yields edged mostly lower on Tuesday,
expectations the bank would rush to begin monetary tightening
were dealt a blow on Monday with news that Kamil Janacek, one of
a minority group on the central bank's board advocating a rate
rise, would miss the meeting this month. []
With markets increasingly leaning away from the chance of a
rate hike at the March 24 meeting, analysts said the crown would
continue to weaken. On the technical front, analysts said, the
crown would look to test its 55-day moving average.
"The (EUR/CZK) pair may try to retest the 55-day moving
average at 24.40. If that is the case, the space up to the 24.71
level would be open," KBC said.
In Poland, bonds were stable ahead of inflation data in the
afternoon, and after firming on Monday on news the finance
ministry is looking to carry out interest rate swap operations
in which it would receive fixed-rate paper. []
The zloty, due to a cap in yields, weakened on the news.
"It seems as if the Polish zloty could be heading above 4.00
against the euro more permanently on the back of a general
worsening of Polish fundamentals -- especially concerns over
Polish public finances," Danske Bank said.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.345 24.319 -0.11% +2.69%
Polish zloty <EURPLN=> 4.056 4.037 -0.47% -2.42%
Hungarian forint <EURHUF=> 273.33 272.04 -0.47% +1.7%
Croatian kuna <EURHRK=> 7.386 7.386 0% -0.08%
Romanian leu <EURRON=> 4.185 4.179 -0.14% +1.15%
Serbian dinar <EURRSD=> 102.6 102.49 -0.11% +3.24%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +15 basis points to 24bps over bmk*
7-yr T-bond CZ7YT=RR +6 basis points to +70bps over bmk*
10-yr T-bond CZ9YT=RR +4 basis points to +74bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +14 basis points to +355bps over bmk*
5-yr T-bond PL5YT=RR +13 basis points to +345bps over bmk*
10-yr T-bond PL10YT=RR +11 basis points to +314bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1202 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 Patrick Graham)
