* FX mixed, Latvia's problems still in view
* Hungary ruling party hit in EP elections, markets unshaken
* Czech April trade shows suprlus, imports sink
(Adds fixed income, detail)
By Dagmara Leszkowicz
WARSAW, June 8 (Reuters) - The Polish zloty and Hungarian
forint inched up on Monday, regaining ground against the euro as
dealers said central Europe's markets would look to developments
in Latvia's battle with its currency peg to take direction.
Separately, European parliamentary elections on Sunday
showed wins for the centre-right and also a strong defeat for
Hungary's ruling Socialists that could destabilise the minority
government, although dealers downplayed its impact on markets.
[] []
At 0849 GMT Poland's zloty <EURPLN=> and the Hungary's
forint <EURHUF=> rose 0.1 percent and 0.2 percent to the euro
respectively, while the Czech crown <EURCZK=> lost 0.1 percent
to the common currency.
Romania's leu <EURRON=> was 0.1 percent up against the euro
but the country's market is closed on Monday due to a holiday.
Stocks in the region were in the red on Monday losing 1-2
percent to open the week softer after previous gains.
"There's no clear trend in the region now so I expect all
the currencies to move in a range," one Warsaw-based dealer
said. "However Latvia's ongoing story is still weighing on
emerging Europe and investors are using it for speculation."
Currencies weakened significantly, losing some 1-3 percent
of its value to the euro, last week as Latvia's struggle to keep
the lat pegged to the euro rattled markets across the region.
Early on Monday Latvia's central banks said interventions by
the bank to support the lat, which has been hit by fears of
devaluation, rose to a new high for the year when it sold 237.3
million euros. []
Some policymakers in central Europe have warned of spillover
effects from Latvia's problems. Analysts, though, note there is
no fundamental link between this region and the Baltics, but
said Baltic woes could raise central Europe's risk perception.
NEXT DIRECTION
Currencies have lost up to a third since hitting record
highs last summer, hit by sharply slowing or contracting
economies. However, they have gained around 10 percent since
March, led by the zloty, in a months-long emerging risk rally.
But with the lagging effects of rising unemployment,
worsening loans and widening government budget gaps, strategists
have expected currencies to keep under pressure, and some have
worried over political stability in the region.
Dealers in Hungary said the result of European election will
not affect the market, and bond yields moved sideways on Monday.
"I don't think the election will have a drastic impact, the
centre-right has gained throughout Europe, it's not a Hungarian
phenomenon," a Budapest-based dealer said.
On the domestic side, Czech data showed April foreign trade
in a surplus, but mainly due to sinking imports as manufacturers
still exported more than 20 percent less than a year ago.
[]
"I do not see any influence on the crown," said Michal
Brozka, analyst at Raiffeisenk Bank. "The development on the
stock markets and the path of its regional peers is more
important in the short term."
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.966 26.949 -0.06% -0.79%
Polish zloty <EURPLN=> 4.539 4.545 +0.13% -9.34%
Hungarian forint <EURHUF=> 286.8 287.49 +0.24% -8.11%
Croatian kuna <EURHRK=> 7.341 7.345 +0.05% +0.33%
Romanian leu <EURRON=> 4.214 4.217 +0.07% -4.74%
Serbian dinar <EURRSD=> 93.85 93.959 +0.12% -4.66%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +31 basis points to 132bps over bmk*
4-yr T-bond CZ4YT=RR +18 basis points to +158bps over bmk*
8-yr T-bond CZ8YT=RR +8 basis points to +251bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -8 basis points to +380bps over bmk*
5-yr T-bond PL5YT=RR -2 basis points to +300bps over bmk*
10-yr T-bond PL10YT=RR -1 basis points to +261bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -28 basis points to +846bps over bmk*
5-yr T-bond HU5YT=RR -60 basis points to +789bps over bmk*
10-yr T-bond HU10YT=RR -47 basis points to +699bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 0949 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, Writing by Dagmara Leszkowicz)
