CEE MARKETS 3-FX reverse gains; forint slides past 300 to euro

                                
 (Recasts to update price fall)
                                
 By Jason Hovet
                                
 PRAGUE, Feb 3 (Reuters) - Investors pushed the Polish zloty
and Hungarian forint weaker through psychological levels against
the euro on Tuesday, triggering falls across central Europe
already suffering under a darkening economic outlook.
                                
 The zloty slipped beyond the 4.50 to the euro level and the
forint traded for the first time on the weak side of 300 after
emerging European bourses tracked western peers lower to give up
early gains.
                                
 "These are speculative moves (on the zloty) aimed at
breaking stop losses as many people bet that currency options
will force companies to buy euros," a Warsaw trader said. "The
weak economic situation adds to the grim outlook."
                                
 Stock gains in early trade had initially given a slight
reprieve to currencies hammered this year by darkening economic
outlooks and falling interest rates in central Europe.
                                
 The forint <EURHUF=> fell 0.8 percent to 299.6 per euro. The
zloty <EURPLN=> fell 1.5 percent to 4.554 per euro by 1111 GMT,
its lowest since July 2004, and the Czech crown <EURCZK=> slid
to a 1-1/2 year low at 28.4 to the euro.
                                
 Forint losses -- already at 12.1 percent in 2009 -- raise
the credit risk of Hungary's banks, a Standard & Poor's official
said on Monday, adding any problems in the banking system
requiring costly state help could put its ratings under
pressure. [ID:nL2335997]
                                
 A forint level above 300 could also hit households which
took out loans in Swiss francs, euros and the Japanese yen in
past years as their monthly repayments rise, analysts say.
                                
 "All emerging market currencies are falling including the
zloty," a currency dealer said. "The question is was 300 the
forint's target or it will weaken further. Bids remain strong,
it may ease further."
                                
 Central Europe's government officials and central bankers
have slashed growth forecasts and cut interest rates in the face
of deepening recession in the euro zone, a main export market.
                                
 Romania is expected to join the policy loosening trend on
Wednesday, while the Czechs are seen cutting interest rates on
Thursday. [ID:nL2408360] [ID:nLS36071] 
Romania's leu <EURRON=> outperformed the region on Tuesday,
adding 0.2 percent to 4.31 per euro. Data showed on Monday a
fall in central bank hard currency reserves, signalling
potential intervention last month. [ID:nL2167237]
                                
 "I don't see how a cut in the key interest rate can hurt the
leu, because interest rates on the interbank market are way
above the central bank's anyway," one dealer said, adding fears
of central bank intervention can put a floor on the currency.
                                
 Interest rate cuts have given short-term boosts to
currencies in recent months as investors cheer measures to
support buckling economies as inflation drops off.
                                
 Gross domestic product data in the region's largest economy,
Poland, last week showed a sharp slowing in the final three
months of 2008. The central bank there has cut interest rates by
175 basis points since November.
                                
 One policymaker said on Tuesday a further reduction cannot
be ruled, while another gave a cut a 50 percent chance.
[ID:nSP405702] [ID:nWAR007865]
                                
 In fixed income, Czech bonds weakened at the short-end. The
Czechs announced plans to issue a new 10-year bond in March,
which dealers said would add market pressure. [ID:L2151847]
                                
 
----------------------MARKET SNAPSHOT-------------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2009 
Czech crown      <EURCZK=>   28.41    28.218  -0.68%    -5.83%
Polish zloty     <EURPLN=>    4.554    4.487  -1.47%    -9.64%
Hungarian forint <EURHUF=>  299.66   297.15   -0.84%    -12.05%
Croatian kuna    <EURHRK=>    7.375    7.354  -0.28%    -0.14%
Romanian leu     <EURRON=>    4.311    4.32   +0.21%    -6.88%
Serbian dinar    <EURRSD=>   94.348   94.429  +0.09%    -5.16%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR   +12 basis points to  115bps over bmk*
4-yr T-bond   CZ4YT=RR   +16 basis points to  +108bps over bmk*
8-yr T-bond   CZ8YT=RR    -6 basis points to  +120bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1212 CET.
Currency percent change calculated from the daily domestic 
close at 1600 GMT.

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 (Reporting by Reuters bureaus, writing by Jason Hovet)