* FX, bonds recoup intraday losses as dollar retreats
* Weakening bias to remain on fears of spillover from Greece
* Polish bonds gain, data point to flat rates in near term
(Recasts throughout)
By Marius Zaharia and Marton Dunai
BUCHAREST/BUDAPEST, Jan 21 (Reuters) - Central European
currencies and bonds recouped intraday losses on Thursday as the
dollar retreated against the euro, but worries about Greek
financial stability continued to weigh on regional assets.
The Hungarian forint <EURHUF=>, which earlier hit 2010 lows,
added 0.6 percent on the day after higher-than-expected jobless
figures in the U.S. contributed to a weaker dollar, benefiting
emerging European assets.
Other currencies were also stronger, with the Romanian leu
adding 0.3 percent by 1450 GMT; while the Czech crown <EURCZK=>
and the Polish zloty <EURPLN=> each gained 0.2 percent.
"The forint is more sensitive to shifts in market sentiment
than other regional currencies," a dealer said in Budapest.
Dealers said they saw a weakening bias for the region's
still developing economies in the longer run as investors sought
safer assets, worried about Greece's ability to finance its vast
budget deficit. []
"I doubt there's much more to the recent bull market," a
dealer in Budapest said.
After a strong start in 2010, currencies were pummelled this
week as Greece's problems raised concerns about the impact on
countries where Greek banks are exposed.
"There are more direct avenues of spillover from Greece to
Emerging Europe," Barclays Capital said in a note. "Especially
the smaller economies of Bulgaria, Macedonia, Albania and
Romania, where trade linkages with Greece dovetail with the
financial sector links to Greek banks."
EURO HEADACHES
Analysts also say that Greece will be used as a negative
example in talks about further euro zone expansion and could
complicate the region's efforts to adopt the euro in years
ahead.
Credit default swap (CDS) prices have risen in the past few
weeks, with Hungarian 5-year CDS <HUGV5YUSAC=R> rates rising to
241 bps from 214 since Jan 11.
Czech 5-year CDS <CZGV5YUSAC=R> have increased 10 basis
points to 94 bps in that time, while Polish CDS <PLGV5YUSAC=R>
are up 17 basis points at 132 bps, according to Reuters data.
Poland, the region's most resilient economy, posted weaker
than expected industrial output for December [].
The Polish central bank said that as long as the recovery is
uncertain and inflationary pressures remain low, it would not
touch the record low interest rates. []
Inflation in Poland was lower than expected in December
[], and producer prices also rose slightly less
than seen [], data showed on Thursday.
Polish bonds were stronger but dealers said recent auctions
shaped the market more than local data did.
Poland placed 3 billion zlotys worth of bonds on Wednesday
amid strong demand, after popular recent placements that
included a sale of 15-year eurobonds worth 3 billion euros.
Investors have followed Poland's privatisation plans, aimed
at propping up revenues, a story that is expected to remain one
of the drivers of Polish markets this year.
Poland will sell stakes in the country's No. 2 refiner Lotos
<LTOS.WA>, worth 420 million zlotys, and the No. 3 utility, Enea
<ENAE.WA>. [] []
"Any positive news coming from Treasury that the ministry is
able to sell its stake in state-controlled companies is good,"
one dealer in Warsaw said.
In the Czech Republic, central banker Robert Holman said a
possible rate hike may come already in the second or third
quarter this year. [].
"This was a surprise as most houses predict a hike to come
late Q3 or Q4 2010," Komercni Banka dealers said.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.959 26.019 +0.23% +1.38%
Polish zloty <EURPLN=> 4.044 4.051 +0.17% +1.48%
Hungarian forint <EURHUF=> 269.83 271.33 +0.56% +0.19%
Croatian kuna <EURHRK=> 7.291 7.292 +0.01% +0.25%
Romanian leu <EURRON=> 4.123 4.134 +0.27% +2.77%
Serbian dinar <EURRSD=> 97.13 97.41 +0.29% -1.29%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +10 basis points to 84bps over bmk*
7-yr T-bond CZ7YT=RR +3 basis points to +130bps over bmk*
10-yr T-bond CZ10YT=RR -1 basis points to +117bps over
bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +1 basis points to +387bps over bmk*
5-yr T-bond PL5YT=RR -1 basis points to +324bps over bmk*
10-yr T-bond PL10YT=RR -2 basis points to +282bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -1 basis points to +551bps over bmk*
5-yr T-bond HU5YT=RR -1 basis points to +502bps over bmk*
10-yr T-bond HU10YT=RR -2 basis points to +452bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1550 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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Other news and reports
World central bank news [] Economic Data Guide <ECONGUIDE>
Official rates [] Emerging Diary []
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(Reporting by Reuters bureaus, Writing by Marius Zaharia;
Editing by Toby Chopra and Patrick Graham)
