* Austria bank worry, firmer dollar weakens CEE assets
* Budget concern weighs on crown ahead of cbank meeting
(Adds further comments, new prices, bonds.)
BUDAPEST, Dec 15 (Reuters) - Central European currencies
fell on Tuesday, with the crown and the forint in the lead as
concerns over Austrian banks led to euro selling against the
dollar, and investors closed positions ahead of the year-end.
Flows into the safe haven dollar often signal dips in risk
appetite, which weakens assets in emerging markets including the
European Union's eastern members.
The dollar rallied versus the euro after Austria had put one
of its major banks on a watch list a day after it nationalised
Hypo Group Alpe Adria. [] [] Austrian
banks own several major commercial banks in Central Europe.
Currencies eased across the region. Hungary's BUX equity
index <> and Poland's WIG20 <.WIG20) dropped almost one
percent, while the Czech PX index <> was flat.
"The dollar is bullish and there are these bank worries in
Austria," a Budapest based currency dealer said.
The crown <EURCZK=> weakened by 0.9 percent versus the euro
by 1016 GMT as a bleak fiscal outlook weighed on the unit ahead
of Wednesday's central bank meeting.
RATE MEETINGS EYED, BUDGETS A RISK
The 2010 budget approved by the Czech parliament carries the
risk of a widening in the public sector gap to nearly 6 percent
of GDP, prompting Finance Minister Eduard Janota to threaten to
quit, although he finally agreed to stay on.
"As for the fundamental reasons, the crown is (still)
pressured by an approval of the high (2010 budget) deficit and
all the talk of the potential resignation of Janota," said David
Sykora, an FX dealer at bank CSOB.
Too much state spending is one of the top risks highlighted
by analysts in their notes about the region's 2010 outlook.
The Czech and Polish central banks are seen keeping interest
rates on hold at their last 2009 meetings, eyeing inflation
pressures, but Hungary was predicted to cut rates further to
help its recession-hit economy. []
The forint <EURHUF=> fell 0.6 percent, with the Hungarian
unit easing past a key technical level at 275.50, which may open
the way for further easing, some dealers said.
It reacted little to final data showing Hungary's industrial
output fell by 12.9 percent in October, in line with a first
estimate [], while Czech markets were eyeing the
year's final interest rate decision due on Wednesday.
Hungarian government bond yields rose by 5-10 basis points,
tracking the forint's weakening.
"Sideways movements of 10-20 bps are likely in the rest of
the year," one trader said. "The early part of the year is
usually good, fresh funds are allocated, and some investors may
want to wait for that rather than building positions now."
The leu <EURRON=> was broadly unchanged after a Romanian
court declared President Traian Basescu victor of a closely
fought election on Monday, handing him a second 5-year term and
the power to end a political crisis that has threatened an
IMF-led aid deal. []
Romania's finance minister said a third, 1.5 billion euro
loan tranche from the International Monetary Fund may come as
early as January. [] The Fund started a three-day
visit to Bucharest on Monday.
The zloty <EURPLN=> also shed half percent against the euro
ahead of inflation data expected later in the day.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.066 25.835 -0.89% +2.64%
Polish zloty <EURPLN=> 4.168 4.149 -0.46% -1.27%
Hungarian forint <EURHUF=> 275.79 274.23 -0.57% -4.44%
Croatian kuna <EURHRK=> 7.262 7.274 +0.17% +1.42%
Romanian leu <EURRON=> 4.247 4.245 -0.05% -5.48%
Serbian dinar <EURRSD=> 95.997 95.87 -0.13% -6.79%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -28 basis points to 81bps over bmk*
7-yr T-bond CZ7YT=RR -10 basis points to +94bps over bmk*
10-yr T-bond CZ10YT=RR -6 basis points to +82bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +2 basis points to +382bps over bmk*
5-yr T-bond PL5YT=RR +2 basis points to +340bps over bmk*
10-yr T-bond PL10YT=RR +1 basis points to +303bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +1 basis points to +550bps over bmk*
5-yr T-bond HU5YT=RR +2 basis points to +512bps over bmk*
10-yr T-bond HU10YT=RR +1 basis points to +443bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1116 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaus, Writing by Gergely
Szakacs/Sandor Peto)
