Debt troubles hit central Europe

Central European currencies softened and stock markets dropped on Friday as the region’s financial community reacted to the troubles experienced by the debt-laden economies of Greece, Portugal and Spain, but the overall impact of the turmoil in the eurozone was smaller than expected.

Unlike a year ago, when the region had been seen in danger of a meltdown due to the global economic crisis, investor interest in the more solid economies of central Europe such as Poland and the Czech Republic remained strong.

The Warsaw stock exchange's broad WIG index was down 3.29 per cent on Friday while the Prague exchange fell by 3.6 per cent. The zloty fell by 0.42 per cent to 4.09 against the euro.

Euro-denominated bonds were still in demand and Polish credit default swaps were 149 basis points, or $149,000 to insure $10m debt annually over five years, more than half of Greece, while Spain was 161bp. The Czech Republic was at 87bp, more or less the same as the UK, a G7 country.

Read more:http://www.ft.com/cms/s/0/9925fa96-127b-11df-a611-00144feab49a.html?nclick_check=1