* CEE FX seen prone to weakness after summer rally
* Hungary cuts some of its bond auctions
(Adds bonds, comments, updates market)
By Marton Dunai
BUDAPEST, Aug 27 (Reuters) - Central European currencies
were mixed on Thursday, with the Polish zloty leading losses and
dealers said they saw room for further easing across the region
as investors' risk appetite wanes after a summer rally.
Hungary cut some of its government bond offers at auctions
<HUAUCTION02> and traders said yields jumped about 10-15 basis
points as investors sold off mainly long papers.
"There is a general halt in the recent market rally, we
could feel it yesterday and today as well," a dealer in Budapest
said. "Yields, especially on the long end, are not ready to go
under 8 percent."
Dealers said second-quarter U.S. gross domestic product
(GDP) data later in the day could provide fresh guidance for the
region's markets by setting the direction for the dollar.
The Polish zloty <EURPLN=> was down 0.3 percent, while the
Czech crown <EURCZK=> was up 0.3 percent and the Hungarian
forint <EURHUF=> was 0.1 percent lower. The Romanian leu
<EURRON=> traded 0.1 percent higher.
"If global stocks (are) in the red, and the second (U.S.)
GDP forecast brings a significant downward revision, the zloty
may continue to fall to about 4.15 against the euro," Bank BPH
analysts wrote in their morning note to clients.
A Hungarian dealer said the forint's support level was at
around 268.00/50 and key resistance levels were seen at 270 and
272.50/70 versus the euro.
Central European currencies gave up gains made earlier in
the week late on Wednesday as global risk appetite ebbed and
investors digested economic data showing the euro zone and the
region were beginning to recover.
Central bankers in Hungary and Poland indicated on Thursday,
however, that further easing was possible if the economic and
inflation outlooks warrant. [] []
The Czech crown firmed, and dealers saw 25.60 to the euro as
the top end of the range for the crown, but they said heavier
trade in September could open more room for firming due to the
improving economic outlook.
"The whole region has gone through a correction and returned
to levels seen at the start of the week," said a Prague currency
dealer. "We still see some room for rallies as it looks like the
economic situation is better."
HUNGARY AUCTIONS WEAK
Hungary's bond auctions attracted milder than expected
demand on Thursday, and the debt agency cut the 5-year and
10-year bond offers and sold 47 billion forints worth of bonds,
less than the 55 billion planned.
"It was a poor auction. Foreigners are selling long papers.
I don't think there is room for yields on the long end to go
lower," a fixed income trader in Budapest said.
The biweekly bond auctions are seen as a key indication of
investors' appetite for Hungarian papers as the country tries to
wean itself off international aid secured last year from the
International Monetary Fund and the European Union.
Polish bonds moved little in a slow market.
"There aren't too many transactions today...There is no
clear trend," said Henryk Sulek, a fixed income dealer at
Millennium Bank. "Tomorrow's GDP data will be very important,
they may shift the market."
Analysts polled by Reuters expected Q2 GDP at 0.5 percent.
Data is due Friday at 0800 GMT.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.401 25.476 +0.3% +5.32%
Polish zloty <EURPLN=> 4.126 4.115 -0.27% -0.27%
Hungarian forint <EURHUF=> 268.85 268.7 -0.06% -1.97%
Croatian kuna <EURHRK=> 7.33 7.317 -0.18% +0.48%
Romanian leu <EURRON=> 4.223 4.228 +0.12% -4.94%
Serbian dinar <EURRSD=> 93.01 93.13 +0.13% -3.8%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR 0 basis points to 86bps over bmk*
4-yr T-bond CZ4YT=RR -10 basis points to +148bps over bmk*
8-yr T-bond CZ8YT=RR +9 basis points to +260bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -5 basis points to +376bps over bmk*
5-yr T-bond PL5YT=RR -3 basis points to +320bps over bmk*
10-yr T-bond PL10YT=RR -4 basis points to +284bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -25 basis points to +637bps over bmk*
5-yr T-bond HU5YT=RR -61 basis points to +567bps over bmk*
10-yr T-bond HU10YT=RR -50 basis points to +490bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1238 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
(Reporting by Marton Dunai, Editing by Jon Boyle)
