* FX rise on econ hopes
* PMI data shows signs of stabilisation
* Czechs continue strong debt issuance
* Polish, Hungarian bonds ease
(Adds details, bonds)
By Jason Hovet and Sandor Peto
PRAGUE/BUDAPEST, May 4 (Reuters) - Central Europe's
currencies gained on Monday as investors saw signs that the
region's downturn is easing and a stock market rise fuelled
hopes that the global economy is healing faster than expected.
The currencies shrugged off new forecasts by the European
Commission for recession in all new European Union members in
the region this year. []
Polish Finance Minister Jacek Rostowski said the country
would post economic growth above one percent this year, saying
that the European Commission's forecast of a contraction was
"mistaken". []
The rate of decline in Czech manufacturing slowed in April,
but was still falling due to a drop in new orders, a survey
showed, while in Poland the index inched down a touch from a
5-month high. []
The data, while far from showing a recovery is near, was the
latest to show the region's export-dependent economies were
grasping for a bottom, and strategists said it could take some
pressure off currencies that have fallen sharply this year.
"This data should confirm some stabilisation in
forward-looking indicators," said Ulrich Leuchtmann, head of
foreign exchange research at Commerzbank in Frankfurt.
"Particularly for foreign exchange markets, there is light
at the end of the tunnel."
Poland's zloty <EURPLN=> and the Czech crown <EURCZK=> led
gains after a long holiday weekend, up 1.1 percent and 1.2
percent against the euro, respectively, from last Thursday.
Markets were closed on Friday for May Day holidays.
In Hungary, among the worst-hit in the downturn but where a
different survey showed an April rise in the purchasing
managers' index, the forint <EURHUF=> was up 0.9 percent.
Romania's leu <EURRON=> was up 0.4 percent at 4.179 per euro by
1424 GMT.
After a retreat following early trade, the region's
currencies regained ground in the afternoon after the U.S.
dollar reversed its earlier firming against the euro, but
turnover was low as London markets were closed.
"The region's currencies again move together and their
levels indicate that the sentiment is not bad, but there is no
real direction," one Budapest-based dealer said.
IMPROVEMENT, FOR NOW
Risk appetite rose after reports on Friday showed U.S.
consumers were more confident over the economy. []
Central European stocks also gained, with bourses in Warsaw,
Prague and Budapest jumping up to 3 percent.
Central European currencies have bounced since mid-February,
with the zloty gaining 12 percent and crown up 10.5 percent. The
zloty neared a record low in mid-February, at one point losing a
third of its value against the euro from a record high in July.
Investor flows to the region have slowly returned since
February, aided by western pledges of funds to underpin regional
lending and financing. The Czechs have already sold almost 80
percent of planned domestic issuance this year and show no signs
of easing up. []
But Hungarian government bonds eased slightly in thin trade,
awaiting the government's repurchase auctions to be held on
Wednesday and sale auctions on Thursday.
The Polish Finance Ministry's CPI forecast of 3.9 percent in
April pushed the 2-year note yields up by 8 basis points.
"Higher inflation could keep the Monetary Policy Council
from easing monetary policy in May and June, as the forecast
shows that we are entering a higher inflation path than
previously believed," said head of bond dealers at Pekao SA,
Maciej Slomka.
----------------------MARKET
SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.478 26.79 +1.18% +1.04%
Polish zloty <EURPLN=> 4.369 4.418 +1.12% -5.81%
Hungarian forint <EURHUF=> 285.55 288.2 +0.93% -7.7%
Croatian kuna <EURHRK=> 7.409 7.415 +0.08% -0.59%
Romanian leu <EURRON=> 4.179 4.194 +0.36% -3.94%
Serbian dinar <EURRSD=> 94.715 94.637 -0.08% -5.53%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -12 basis points to 167bps over bmk*
4-yr T-bond CZ4YT=RR -14 basis points to +197bps over bmk*
8-yr T-bond CZ8YT=RR -8 basis points to +292bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -13 basis points to +414bps over bmk*
5-yr T-bond PL5YT=RR -9 basis points to +338bps over bmk*
10-yr T-bond PL10YT=RR -11 basis points to +295bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -33 basis points to +876bps over bmk*
5-yr T-bond HU5YT=RR -67 basis points to +811bps over bmk*
10-yr T-bond HU10YT=RR -57 basis points to +710bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1624 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
Eastern Europe spot FX <EEFX=> Middle East spot FX <MEFX=>
Asia spot FX <ASIAFX=> Latin America spot FX <LATAMFX=>
Other news and reports
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(Reporting by Reuters bureaus, writing by Jason Hovet/Sandor
Peto; editing by Patrick Graham/Victoria Main)
