* FX fall with emerging markets as euro, stocks down
* Hungarian bond yields lower at auction, Romania due
(Updates with Hungary bonds, poll)
PRAGUE, Nov 19 (Reuters) - The Polish zloty and Hungarian
forint led a retreat in central Europe on Thursday as investors
pulled back from emerging markets on capital control concerns.
Investors cut gains from emerging markets as worries grew
that capital controls could spread after Brazil's attempt to
curb foreign inflows into its soaring currency. []
But while analysts said capital controls in emerging Europe
were unlikely soon, the investor pullback from risk assets
pushed the dollar higher and equities lower to reverse the
support central European currencies have had this month.
"The region has been benefiting from a weakening dollar and
strengthening equities, but that looks over now," a Prague-based
dealer said. "It is still risk on/risk off."
Romania's leu bucked the trend to hold a five-week high
before the first round of presidential elections on Sunday and
with central bank intervention risk hanging over the unit.
The leu <EURRON=> was steady to bid at 4.278 to the euro by
1228 GMT, while the forint <EURHUF=> fell 0.8 percent to 267.5
to the euro. The Czech crown <EURCZK=>, often seen as a safe
haven bid in the region, lost 0.5 percent to 25.56 per euro.
The zloty <EURPLN=> lost 0.6 percent ahead of industrial
output data later in the day. European stocks fell, with Warsaw
<> and Budapest <> down 1-2 percent. Currency weakness
also knocked back bonds in the region.
Murat Toprak, an emerging markets strategist at Societe
Generale, said CEE markets were getting caught in selling with
other emerging markets even as capital control risk was small.
"FX strength could potentially become an issue for CEE (but)
not at this stage," he said.
The region's currencies have rebounded from this year's lows
but have struggled to return to levels seen a year ago.
The crown, zloty and forint have posted gains of as much as
four percent this month, propelled by dollar weakness giving
investors cheap funding options, signs of an economic turnaround
in some of central Europe's hardest-hit economies, and, in the
forint's case, a higher yield carry.
BOND SALES
Yields at a Hungarian bond auction fell slightly from two
weeks ago as bonds found support before a central bank meeting
next week where policymakers are seen cutting interest rates 50
bps to 6.5 percent. [] []
Hungarian Finance Minister Peter Oszko said on Thursday the
country's restrictive fiscal policy leaves room for less
restrictive central bank monetary policy. []
Hungary has gradually moved back to regular bond auctions
this year after getting an IMF-led aid package last year. The
debt agency said on Wednesday it would hold a switch auction
next week. []
In Romania, another IMF country, the finance ministry was
due to offer three-year treasury bonds -- another test as debt
sales have stumbled since the government collapsed last month.
The winner of elections there will have the responsibility
of choosing the next prime minister who will lead talks with the
International Monetary Fund, which has said a mission would
return after the political situation was clarified.
The IMF halted a review of Romania's 20 billion euro aid
package on Nov. 6 after the centrist government was toppled last
month. [] []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.56 25.42 -0.55% +4.67%
Polish zloty <EURPLN=> 4.145 4.101 -1.06% -0.72%
Hungarian forint <EURHUF=> 267.49 265.46 -0.76% -1.47%
Croatian kuna <EURHRK=> 7.315 7.315 0% +0.68%
Romanian leu <EURRON=> 4.278 4.272 -0.14% -6.16%
Serbian dinar <EURRSD=> 94.42 94.27 -0.16% -5.23%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -16 basis points to 101bps over bmk*
7-yr T-bond CZ7YT=RR -1 basis points to +111bps over bmk*
10-yr T-bond CZ10YT=RR +1 basis points to +98bps over bmk*
All data taken from Reuters at 1330 CET.
Currency percent change calculated from the daily domestic
close at 1700 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 Jason Hovet, editing
by Mike Peacock and Victoria Main)
