* CEE FX give back overnight gains from weak dollar
* Stocks continue rally, lending FX support
* Hungary, Czech cbank expected to hold rates next week
* Hungarian, Czech govts' position eyed
(Adds market details, fx, bonds, comments)
By Jason Hovet and Marton Dunai
BUDAPEST, March 19 (Reuters) - Eastern European currencies
gave back overnight gains Thursday afternoon as some major stop
loss positions were triggered in London, prompting a slide in
all regional currencies, traders said.
The Polish zloty <EURPLN=>, which had gained 1 percent on
the euro thanks to the dollar, swung to a slide, trading at
4.586 at 14:20 GMT.
The Hungarian forint <EURHUF=> had firmed more than 1.5
percent, then gave back most of that to trade at 300.48 against
the euro, firmer only 0.5 percent on the day.
The Czech crown <EURCZK=> held to tighter ranges after an
overnight jump due to the dollar, adding 0.6 percent at 26.88 to
the euro.
Dealers said the market would likely remain choppy and
illiquid in coming days as investors sort out a clear direction.
"People have just been jumping at short-term moves this week
and then booking profit," one dealer said.
Markets have also kept a cautious eye on the shaky
government coalition in Prague in the run-up to a no-confidence
vote due next week. []
Hungary's ruling Socialists are also set to choose new
leaders over the weekend, and Prime Minister Ferenc Gyurcsany
may see his position weakened. []
The Czech and Hungarian central banks are both expected to
hold rates at monetary policy council meetings next week,
Reuters polls showed on Thursday. [] []
In Hungary, the median forecast in the poll sees the economy
shrinking by 4.5 percent this year, compared to 3.5 percent in
the previous poll.
Stock markets in Europe edged higher on Thursday, with
central Europe's markets following behind.
In Romania, the leu <EURRON=> was stable against the euro,
and has traded within tight ranges around 4.29 for weeks as
markets await the outcome of Bucharest's negotiations with the
International Monetary Fund for an aid package.
The leu has shown little reaction to the prospects of
Romania getting financial aid even though many economists say
such a package would be a positive sign for the overstretched
economy.
PAYING DEBTS
Central European currencies have dropped by up to 25 percent
since touching record highs last summer as the region's
export-reliant economies get dragged lower in the global
slowdown, and worries over external financing mount.
A recent rally in currencies, with 3-4 percent gains in the
past two weeks, has helped breathe some life back into bond
markets, with Hungarian yields especially ticking down.
But dealers said a turnaround was still not completely in
motion, and investors did not believe the government's plans to
stick to a 3 percent budget gap were viable.
A Hungarian Finance Ministry official in Budapest told a
news conference that the first-quarter deficit would likely
reach 80 percent of the year-end goal, but there was no need to
revise the main assumptions in the budget. []
Czech bond yields were up slightly.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.88 27.042 +0.6% -0.47%
Polish zloty <EURPLN=> 4.586 4.575 -0.24% -10.27%
Hungarian forint <EURHUF=> 300.48 301.93 +0.48% -12.29%
Croatian kuna <EURHRK=> 7.445 7.445 0% -1.07%
Romanian leu <EURRON=> 4.298 4.294 -0.09% -6.6%
Serbian dinar <EURRSD=> 94.418 94.298 -0.13% -5.23%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +12 basis points to 225bps over bmk*
4-yr T-bond CZ4YT=RR +40 basis points to +280bps over bmk*
8-yr T-bond CZ8YT=RR +6 basis points to +330bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -8 basis points to +357bps over bmk*
5-yr T-bond PL5YT=RR +8 basis points to +300bps over bmk*
10-yr T-bond PL10YT=RR +13 basis points to +263bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -21 basis points to +1055bps over bmk*
5-yr T-bond HU5YT=RR -50 basis points to +1021bps over bmk*
10-yr T-bond HU10YT=RR -33 basis points to +890bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1618 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 and
Marton Dunai; Editing by Ruth Pitchford/Victoria Main)
