CEE MARKETS 2-Forint leads fall on growth concerns, N.Korea

                                
 * FX lower on worse economic outlook, N.Korea
                                
 * Hungary's c.bank's growth prospects negative
                                
 * Polish retail sales, jobless data better than fcast
                                
 
  (Adds fixed income, quotes)
                                
 By Dagmara Leszkowicz
                                
 WARSAW, May 26 (Reuters) - Hungary's forint led losses in
central Europe on Tuesday, with some analysts pointing to
growing chances of a cut in interest rates after a central bank
meeting that said the economy may not recover before 2011.
                                
 Stocks also fell, pointing to a weaker tone for global risk
appetite and emerging markets, after North Korea said it had
fired new missiles, adding to tensions at a time when markets
are questioning recent optimism. [ID:nSEL000626]
                                
 In Hungary, the central bank said on Monday it expects the
country's economy to contract by 6.7 percent and said a cut
could come if sentiment for its battered forint currency
improves in a lasting way.
                                
 At 0859 GMT, Hungary's forint <EURHUF=> was 1.0 percent
weaker against the euro to bid at 282.67.
                                
"Against a firmer risk appetite backdrop, the dovish elements
suggest that the bank is getting closer to cutting rates and is
not necessarily interested in pushing EUR/HUF significantly
lower," said Gyula Toth, analyst at Unicredit bank in Hungary.
                                
 Central Europe's export-driven economies have suffered from
a fall in demand from western European markets, most notably
Germany, where the stats office released final GDP figure
showing the economy contracted by 6.7 percent on the year in the
first quarter. [ID:nLQ407738]
                                
 "There's no more good news out so investors are getting
cautious with emerging (markets). This recent optimism could be
kept up only by more and more good news," a Budapest-based
currency dealer said.
                                
 Emerging European bourses were also down with Bucharest
dropping more than 2 percents while Budapest gave up earlier
gains.

                                
 DOMESTIC FACTORS
                                
 Poland releases official GDP figures for the first quarter
on May 29. Analysts polled by Reuters expect the economy to
expand by just 1 percent -- far below the rates of recent years,
but besting sharp drops elsewhere in the region.
                                
 The country's statistic office said on Tuesday April retail
sales rose 1 percent, up from 0.8 percent fall in March, while
unemployment rate fell to 11.0 percent. [ID:nLQ69441]
                                
 "The data is slightly better than expected and is still
suggesting that perhaps Poland is proving more resilient than
the rest of the region," said Timothy Ash, head of Emerging
European Research at RBS.
                                
 The zloty <EURPLN=> showed no reaction to the better data,
losing 0.7 percent to the euro. The crown <EURCZK=> also edged
lower pulled by the region and dealers said the Czech currency
was weighed down by the country's budget worries.
                                
 The Czech Finance Ministry has said it expects budget
deficits to stay above the 3 percent of gross domestic product
ceiling set by the European Union until 2012, keeping the Czech
Republic out of the euro zone for years to come. [ID:nLP275690]
                                
 In Romania the leu <EURRON=> was also slightly down, traded
at 4.179 against the single currency.
----------------------MARKET SNAPSHOT-------------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2009 
Czech crown      <EURCZK=>  26.715    26.66   -0.21%    +0.14%
Polish zloty     <EURPLN=>   4.436     4.407  -0.65%    -7.24%
Hungarian forint <EURHUF=> 282.67    279.83   -1%       -6.76%
Croatian kuna    <EURHRK=>   7.301     7.301   0%       +0.88%
Romanian leu     <EURRON=>   4.179     4.167  -0.29%    -3.94%
Serbian dinar    <EURRSD=>  94.44     94.273  -0.18%    -5.25%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR   +4 basis points to  159bps over bmk*
4-yr T-bond   CZ4YT=RR   +1 basis points to  +184bps over bmk*
8-yr T-bond   CZ8YT=RR   +1 basis points to  +275bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR    -1 basis points to  +431bps over bmk*
5-yr T-bond   PL5YT=RR    -2 basis points to  +330bps over bmk*
10-yr T-bond PL10YT=RR    -3 basis points to  +279bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR    -26 basis points to  +846bps over bmk*
5-yr T-bond   HU5YT=RR    -60 basis points to  +772bps over bmk*
10-yr T-bond   HU10YT=RR  -49 basis points to  +652bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 0959 CET.
Currency percent change calculated from the daily domestic 
close at 1600 GMT.

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 (Reporting by Reuters bureaus, Writing by Dagmara
Leszkowicz; editing by Patrick Graham)