* CEE currencies seek direction, positive mood prevails
* Stock gains lend support to FX
* Poland's euro doubts, Hungary CPI shrugged off
By Marton Dunai
BUDAPEST, May 12 (Reuters) - East European currencies
recovered from early losses on Tuesday, helped by a rise in the
region's stock markets, despite more data and news showing tough
economic times ahead.
Czech joblessness crept higher in April and inflation slowed
to its lowest in more than 2 years, but consumer prices in
Hungary jumped unexpectedly. [] []
Czech credit default swaps, however, dropped to around 100
bps, its lowest reading since October, indicating lower risk
outlook for one of central Europe's most stable economies.
In Poland, the zloty worked off early losses and hovered at
Monday's closing levels around 4.383 against the euro, seeking
direction. That was despite Finance Minister Jacek Rostowski
saying a January 2012 euro adoption target date might have to be
put off by a year or more because of the global crisis.
[]
The Hungarian forint, the region's top performer in the
ongoing rally over the last two weeks, followed the zloty and
was largely unchanged at 1000 GMT, while the Czech crown
<EURCZK=> nudged stronger by 0.2 percent.
Dealers said they expected no marked new direction on
Tuesday, with the markets ignoring local economic data.
"The (Hungarian) inflation result was ugly, we must say, but
the main driver of the market is still the core market's
weakness and perhaps the bad news on the euro date out of
Poland," a dealer in Budapest said.
"These (strong forint) levels are not realistic, looking at
the fundamentals," the dealer added. "We also see, however, that
aside from stops and core market developments, there is nothing
much holding (regional currencies) here."
Stock markets gave support with Warsaw and Prague gaining
around 2 percent on Tuesday, adding to more than 20 percent
gains since April.
Romania's leu <EURRON=> gained 0.1 percent to 4.15 per euro
after data showed inflation eased to 6.5 percent in April,
leaving room open for easier monetary policy. []
Central banks in emerging Europe have slashed interest rates
since last autumn but have slowed the pace to keep financial
stability after currencies plunged to or near record lows in
February.
Hungarian government bonds were steady, in thin volumes.
A government auction of 3-month treasury bills attracted
sufficient demand and the government sold 40 billion forints
worth of papers as planned <HUAUCTION01>.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.748 26.8 +0.19% +0.02%
Polish zloty <EURPLN=> 4.395 4.383 -0.27% -6.37%
Hungarian forint <EURHUF=> 279.21 279.1 -0.04% -5.61%
Croatian kuna <EURHRK=> 7.348 7.436 +1.2% +0.23%
Romanian leu <EURRON=> 4.149 4.155 +0.14% -3.24%
Serbian dinar <EURRSD=> 94.465 94.45 -0.02% -5.28%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +5 basis points to +155bps over bmk*
4-yr T-bond CZ4YT=RR +7 basis points to +188bps over bmk*
8-yr T-bond CZ8YT=RR -3 basis points to +277bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -4 basis points to +428bps over bmk*
5-yr T-bond PL5YT=RR -4 basis points to +336bps over bmk*
10-yr T-bond PL10YT=RR -3 basis points to +291bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -31 basis points to +848bps over bmk*
5-yr T-bond HU5YT=RR -62 basis points to +776bps over bmk*
10-yr T-bond HU10YT=RR -49 basis points to +650bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1202 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
(Reporting by Marton Dunai; Editing by Andy Bruce)
