* CEE currencies recover from sharp falls post-EU summit
* Romanian leu shrugs off IMF talks
* Bonds move sideways, sentiment fragile
(Updates throughout)
By Gergely Szakacs and Marius Zaharia
BUDAPEST/BUCHAREST, March 3 (Reuters) - Most central
European currencies recovered some ground on Tuesday after heavy
losses in the previous session over disappointment from the lack
of coordinated action for the region, while the leu was little
moved by news Romania was in talks with the IMF.
Dealers said a weakening of the dollar in early trade was
the trigger for a regional correction after Monday's plunges
caused by the rejection of a mass bailout plan for the region at
an EU summit over the weekend.
Romania's <EURRON=> leu did not join the trend, trading flat
even if markets received more confirmation on Tuesday that the
country was in talks with the IMF to secure help to finance a
vast external gap, its main economic headache [].
The leu has fallen 6.5 percent since the start of the year
-- much less than 13 and 14 percent falls for Poland's zloty and
Hungary's forint -- and dealers have cited central bank covert
interventions to defend the 4.3-4.35 level.
But analysts said there was still doubt over Romania's
ability to meet IMF's demands within the deal.
"We still need to see what conditionality the IMF is talking
about for Romania, and we need to be sceptical as to whether
Romania is going to be in a position to meet that
conditionality," said Jon Harrison, strategist from Dresdner
Kleinwort.
In the rest of the region, the Polish zloty <EURPLN=> gained
0.6 percent by 1447 GMT, while the Czech crown <EURCZK=> added
1.1 percent to three-week highs, leading gains.
The crown had dropped in Monday's rout before paring losses
later in the day, and dealers said some differentiation
considering better Czech economic fundamentals may be appearing.
"The crown has been going its own way the last couple of
days," one dealer said. "There could be some macroeconomic
reasons behind that."
In Hungary, the forint <EURHUF=> dipped 0.24 percent.
Fitch Ratings on Monday cut the outlook on Hungary's
long-term foreign and local currency ratings to negative from
stable, citing a worsening economic outlook and debt risks,
while leaving its ratings unchanged.
Regional currencies have been hurt by deteriorating economic
outlooks and worries over potential difficulties in refinancing
debt or in the case of Poland, companies' exposure to wrong bets
on the zloty when it was firming to record highs in the summer.
Policymakers have been trying to differentiate the economies
and have been attempting to dispel the perception that the
region was the subprime of Europe.
Many analysts think that while countries like Poland and
Czech Republic seem more resilient to the crisis, the region's
units still have chances to move in tandem until it secures a
broader aid package to underpin confidence.
"The region's currencies will continue to move together, if
the forint falls, the zloty will not escape either," one dealer
in Budapest said.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 27.897 28.195 +1.07% -4.1%
Polish zloty <EURPLN=> 4.747 4.775 +0.59% -13.31%
Hungarian forint <EURHUF=> 307.65 306.92 -0.24% -14.33%
Croatian kuna <EURHRK=> 7.355 7.426 +0.97% +0.14%
Romanian leu <EURRON=> 4.297 4.302 +0.12% -6.58%
Serbian dinar <EURRSD=> 93.6 93.549 -0.05% -4.4%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -1 basis points to 231bps over bmk*
4-yr T-bond CZ4YT=RR -1 basis points to +250bps over bmk*
8-yr T-bond CZ8YT=RR -14 basis points to +315bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +3 basis points to +457bps over bmk*
5-yr T-bond PL5YT=RR -1 basis points to +387bps over bmk*
10-yr T-bond PL10YT=RR -1 basis points to +325bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +19 basis points to +1186bps over bmk*
5-yr T-bond HU5YT=RR -8 basis points to +1016bps over bmk*
10-yr T-bond HU10YT=RR 0 basis points to +832bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1647 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus; Editing by Andy Bruce)
