* Czech crown moves near key resistance level
* Leu stays subdued with c.bank worries
* Bond yields mixed as investors shun EZ periphery
* Trade quiet as wary investors eye U.S. data
(Adds bonds, updates prices)
By Jason Hovet
PRAGUE, Aug 17 (Reuters) - Central European currencies
firmed on Tuesday, but gains were limited as investors took
stock of the potential impact on the region of a faltering
global recovery.
The Czech crown rose towards a key resistance level against
the euro, and stock markets edged higher, led by gains of up to
1 percent in Budapest <> and Prague <> that supported
local currencies.
Most central European economies posted better-than-expected
second quarter GDP readings at the end of last week, but
analysts say the pace of recovery is set to slow as consumer
demand remains sluggish and governments cut budgets.
Emerging Europe's export-driven economies would also be hurt
by a slowdown in Western economies, which increasing numbers of
investors are starting to anticipate. On Tuesday, eyes were
turned to U.S. production and housing data due in the afternoon.
Analyst and investor sentiment in Germany, a main trade
partner for the region, fell in August to its lowest since April
2009. []
Currencies showed little reaction to the news. The Czech
crown <EURCZK=> edged up, mainly on local demand, gaining 0.2
percent to bid around the 24.800 level that has triggered euro
selling in the past month.
"If I were to bet, I would say it will break through 24.800
and then go somewhere around 24.700," a Prague dealer said. "The
foreign players are not doing much... they are holding their
positions now because there is no panic. Everybody believes that
in the long term it will be around 24.500."
The crown -- backed by fiscal tightening plans from the new
centre-right government that investors and ratings agencies have
welcomed -- has been a top performer in the region this year. It
has gained more than 6 percent, which is twice the pace of the
Polish zloty's appreciation.
Czech bond yields, which have touched lifetime lows on the
long end, ticked up slightly.
WAITING ON IMPULSE
Polish bond yields were steady or lower before wage data
coming out in the afternoon.
Hungarian yields continued to rally downward by up to 15
basis points. The debt agency sold more than planned in 3-month
bills on Tuesday at a lower yield than a previous sale.
A return of worries over debt in the euro zone periphery has
helped central European markets.
"It is clear that investors are afraid of investing in bonds
of the euro zone peripheries, such as Ireland, where yields are
growing. This helps Poland's bonds now," a Warsaw dealer said.
The zloty <EURPLN=> inched up 0.1 percent by 0930 GMT along
with the Hungarian forint <EURHUF=>. Romania's leu <EURRON=> was
stuck around 4.23 to the euro.
Bucharest dealers said interest in trading euro/leu remained
subdued, given concerns about central bank interventions that
market players say have occurred regularly in both directions
since the global crisis broke out in late 2008.
Traders expect the leu to remain stuck in a 4.2-4.3 per euro
range as long as the government keeps an International Monetary
Fund aid deal on track.
"I expect the leu to trade within 4.22-4.24 per euro in the
medium term," one trader in Bucharest said. "A 4.17/4.18 level
is not untouchable, but there is huge support at that level."
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.806 24.85 +0.18% +6.1%
Polish zloty <EURPLN=> 3.971 3.975 +0.1% +3.35%
Hungarian forint <EURHUF=> 279.1 279.3 +0.07% -3.14%
Croatian kuna <EURHRK=> 7.244 7.24 -0.06% +0.9%
Romanian leu <EURRON=> 4.234 4.232 -0.05% +0.08%
Serbian dinar <EURRSD=> 105.44 104.42 -0.97% -9.07%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -1 basis points to 112bps over bmk*
7-yr T-bond CZ7YT=RR -4 basis points to +112bps over bmk*
10-yr T-bond CZ9YT=RR -3 basis points to +117bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR 0 basis points to +404bps over bmk*
5-yr T-bond PL5YT=RR -8 basis points to +384bps over bmk*
10-yr T-bond PL10YT=RR -5 basis points to +336bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -18 basis points to +581bps over bmk*
5-yr T-bond HU5YT=RR -13 basis points to +533bps over bmk*
10-yr T-bond HU10YT=RR -18 basis points to +460bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1130 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;
editing by Stephen Nisbet)
