* CEE currencies recover from sharp falls post-EU summit
* Romanian leu shrugs off IMF talks
* Czech crown outperforms
* Bonds move sideways, sentiment fragile
(Adds crown move, comment)
By Gergely Szakacs and Marius Zaharia
BUDAPEST/BUCHAREST, March 3 (Reuters) - Central Europe's
battered currencies clawed back some ground on Tuesday helped by
some improvement on global stock markets, while the leu shrugged
off news that Romania was in talks with the IMF.
Dealers said a weakening of the dollar in early trade had
triggered regional gains after currencies plunged on Monday due
to European Union leaders' rejection of a 180 billion euro,
Hungarian-proposed bailout plan.
The Czech crown outperformed, with some dealers saying the
currency may have been lifted by large buyers linked to drug
company Sanofi-Aventis' <SASY.PY> acquisition of Czech drug
maker Zentiva <>, worth an estimated 30 billion crowns.
Romania's leu <EURRON=> traded flat, despite confirmation on
Tuesday that the country was in talks with the IMF to secure
help to finance its vast external shortfall [].
The leu has fallen 6.5 percent against the euro since the
start of the year -- much less than the 13 and 14 percent falls
in Poland's zloty and Hungary's forint.
Dealers have said one factor supporting the leu could be
possible covert central bank interventions.
Analysts said although a deal looked to be in the works,
there was still doubt over Romania's ability to meet the
International Monetary Fund's requirements for a 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," said Jon
Harrison, strategist from Dresdner Kleinwort.
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The region's currencies have been hurt by worsening 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.
On Tuesday, Poland's zloty <EURPLN=> gained 0.6 percent by
1447 GMT, while Hungary's forint <EURHUF=> dipped 0.24 percent
and the Czech crown <EURCZK=> added 1.1 percent to rise to
three-week highs.
Some dealers said the crown may have risen on better
economic fundamentals, but others cited rumours of crown buying
from French drug maker Sanofi-Aventis for its purchase of shares
in Czech generics drug maker Zentiva.
"I think they've been doing it for several days," said a
Prague trader. "Today the whole market is talking about this,
but no one is confirming it."
A Sanofi spokesman in Paris had no immediate comment.
Sanofi succeeded in a 1,150 crown per share bid for Zentiva
last month -- valuing the company at 43.9 billion crowns -- and
raised its stake to 94 percent from 24.9 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.
Policymakers in the Czech Republic and Poland have been
trying to differentiate their economies from their weaker peers
and have tried to dispel the perception that the entire region
is set to collapse.
Many analysts say that while some countries are better-off
fundamentally, only a broader aid deal will underpin confidence
and allow the region's stronger currencies and economies to
stand out.
"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 Patrick Graham)
