* Czech c.bank cuts rates
* Currencies erase part of IMF-triggered gains on EBRD fcast
* Region seen cutting rates further
* Poland will issue at least 750 mln euros in eurobonds
(Adds Czech rate cut, quotes, details)
By Dagmara Leszkowicz and Marius Zaharia
WARSAW/BUCHAREST, May 7 (Reuters) - Central Europe's
emerging currencies handed back some early gains on Thursday
after a bearish growth forecast from the region's aid bank,
while the Czech crown suffered from a cut in interest rates.
The European Bank for Reconstruction and Development (EBRD)
on Thursday said emerging Europe's economy would contract by 5.2
percent in 2009, a far deeper downturn than the 0.1 percent
growth estimate it made in January.
Analysts cited intraday profit-taking and also said the
region had suffered from a shakier tone on the euro following
the European Central Bank's move in the direction of
quantitative easing to boost the euro zone economy.
"The EBRD could be a cause for a general profit taking that
we've seen across the region," one Stockholm trader said.
"Everything went fine in the morning ... but it just went too
far, so the correction had to come."
The Czech crown <EURCZK=> held onto most of its 1 percent
gain from morning trade, but also eased back after a central
bank move to cut interest rates by 25 basis points to a historic
low of 1.5 percent []
"Obviously it's hit the Czech crown, but the central bank
has little other choice with economic backdrop the way it is,"
said Chevreux's Simon Quijano Evans.
"There will not be massive (currency) appreciation through
the summer months given that central banks in the region are
going on the rate cutting cycle again."
The Czech decision followed a surprise 50 basis points cut
in Romania on Wednesday, which the central bank called
"prudent", saying there was still room for further easing,
although limited.
A Polish central banker also said on Thursday the bank
remained in monetary easing bias. []
Hungary's forint <EURHUF=> hit a 4-month high before
retreating, also boosted by better industrial output and trade
data. []
"The data suggest that industrial production might have
reached bottom in the region but it is too early to herald the
end of the recession as production is still at a very depressed
level," Zsolt Kondrat at MKB Bank said.
The Romanian leu <EURRON=> rose 0.5 percent and the central
bank said "speculative" pressure on the unit had already peaked.
IMF BOOSTS
The Polish zloty <EURPLN=> rose by 0.6 percent, off morning
highs caused by a late confirmation that the IMF approved a
flexible credit line for Poland, although dealers said much of
the information was already priced in. []
The IMF also said it had overstated eastern Europe's
financing needs and revised downwards the figures for Czech
Republic and Estonia, causing a regional morning rally.
[]
Polish bonds tracked the currency. The country increased the
size of the tap of its 2014 bond to 750 million euros from the
originally planned 250 million euros, but dealers said that had
little impact on local bonds. []
Hungary sold more bonds than it had originally offered on
Thursday, continuing regular debt auctions, only restarted last
month as the worsening of the crisis paralysed its debt markets
late last year. Hungarian bond yields fell 30 basis points.
Meanwhile, the ECB cut rates by 25 basis points to 1 percent
and dealers said that had little impact on the region, highly
indebted in euros, as it was widely expected [].
Investors' sentiment also got some impetus from the U.S.
treasury which said none of the 19 banks being examined under
stress tests were at risk of insolvency. []
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.58 26.755 +0.66% +0.65%
Polish zloty <EURPLN=> 4.367 4.394 +0.62% -5.77%
Hungarian forint <EURHUF=> 278.4 283.86 +1.96% -5.33%
Croatian kuna <EURHRK=> 7.358 7.36 +0.03% +0.1%
Romanian leu <EURRON=> 4.131 4.15 +0.46% -2.82%
Serbian dinar <EURRSD=> 94.78 95.035 +0.27% -5.59%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -10 basis points to 161bps over bmk*
4-yr T-bond CZ4YT=RR -30 basis points to +184bps over bmk*
8-yr T-bond CZ8YT=RR -9 basis points to +280bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -16 basis points to +416bps 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 +288bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -37 basis points to +827bps over bmk*
5-yr T-bond HU5YT=RR -38 basis points to +755bps over bmk*
10-yr T-bond HU10YT=RR -42 basis points to +637bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1814 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 []
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(Reporting by Reuters bureaus, writing by Dagmara
Leszkowicz/Marius Zaharia; editing by Patrick Graham)
