CEE MARKETS 3-Forint leads FX down on econ outlook, N.Korea

                                
 * FX lower on weaker economic outlook, N.Korea
                                
 * ECB's June projections to be more negative -Nowotny
                                
 * Russia warns of worse crisis than in 1998
                                
 * Polish retail sales, jobless data better than f'cast
                                
 
  (Updates prices, adds new detail)
                                
 By Dagmara Leszkowicz and Gergely Szakacs
                                
 WARSAW/BUDAPEST, May 26 (Reuters) - Hungary's forint led
losses in central Europe on Tuesday, shedding 1 percent to the
euro, as events in Asia and the euro zone undermined any
prospects of a fast recovery from the economic crisis.
                                
 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]
                                
 At 1321 GMT, Hungary's forint <EURHUF=> was 1.02 percent
weaker against the euro to bid at 282.70.
                                
"The region's currencies are moving together, the earlier
bullish sentiment is over," a currency dealer said. "The economy
(of Hungary) and the European Union is not in good shape. A
quick recovery can be ruled out."
                                
 Central Europe's export-driven economies have suffered from
a fall in demand from western European markets, most notably
Germany, where the statistics office released final GDP figures
showing the economy contracted by 6.7 percent on the year in the
first quarter. [ID:nLQ407738]
                                
 European Central Bank Governing Council member Ewald Nowotny
said on Tuesday the ECB's June staff projections would be more
negative than those earlier in the year [ID:nLQ720725], while
Russia warned of a deeper downturn than its 1998 crisis.
[ID:nLQ639729]
                                
 Emerging European bourses were also down, with Warsaw
dropping just under 1 percent while Budapest erased early gains
to shed 1.3 percent.
                                
 
                                
 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 statistics office said on Tuesday April retail
sales rose 1 percent, up from an 0.8 percent fall in March,
while the 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.
                                
 Despite the data, the zloty <EURPLN=> was down 0.7 percent
to the euro, while the crown <EURCZK=>, weighed down
additionally by the country's budget worries, was also slightly
weaker.
                                
 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, trading
at 4.18 against the single currency.
----------------------MARKET SNAPSHOT-------------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2009 
Czech crown      <EURCZK=>   26.726   26.66   -0.25%   +0.1%
Polish zloty     <EURPLN=>    4.437    4.407  -0.68%   -7.26%
Hungarian forint <EURHUF=>  282.7    279.83   -1.02%   -6.77%
Croatian kuna    <EURHRK=>    7.282    7.301  +0.26%   +1.14%
Romanian leu     <EURRON=>    4.18     4.167  -0.31%   -3.96%
Serbian dinar    <EURRSD=>   94.376   94.273  -0.11%   -5.19%

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 1321 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 Stephen Nisbet)