* Euro, stocks help buoy FX, leu remains stuck
* Hungary output disappoints, forint holds near 9-mth highs
(Adds bond prices, Hungary details)
PRAGUE, Feb 8 (Reuters) - Central European currencies edged
higher on Tuesday, with the zloty up on expectations of
upcoming monetary policy tightening in Poland and the Hungarian
forint shaking off disappointing industrial data.
In Romania, the leu trailed, failing to get a boost from a
new two-year precautionary International Monetary Fund deal as
the country's monetary policy outlook remains unclear.
A firming euro, the reference currency the region typically
tracks, buoyed emerging Europe, while central European stock
markets were mostly up to add support.
The zloty <EURPLN=>, which hit its highest since mid-January
in the previous session thanks to ongoing interest rate hike
expectations, added 0.2 percent. The Czech crown <EURCZK=>
gained 0.3 percent.
The Hungarian forint <EURHUF=> rose 0.1 percent, but pulled
back after nearing the nine-month highs it hit on Monday.
Hungary's bonds moved sideways.
The leu <EURRON=> edged up less than 0.1 percent.
Analysts said the market seemed indecisive on the region's
currencies after the zloty, forint and crown posted more than 3
percent rises since the start of this year.
The crown has fallen from peaks hit last week to the weak
side of 24 to the euro, and markets will focus on inflation data
due on Wednesday to gauge future moves and whether the central
bank may be pushed to raise interest rates sooner than expected.
"While little in terms of market-moving data is in the
offing this week, we expect the low liquidity conditions to
limit CEE gains," Danske Bank said.
HUNGARY OUTPUT WEAKER
Improved global sentiment and expectations over the
Hungarian government reform plans to be unveiled this month have
lifted Hungarian assets. []
Prime Minister Viktor Orban's government is working on a
600-650 billion forint plan to stabilise the budget, and vowed
on Monday to reduce the country's debt.
Hungary's industrial output rose by an annual 8.5 percent in
December, slowing from a 14.7 percent rise in November and far
undershooting analysts' median forecast for 17.1 percent growth.
Output dropped month-on-month, and analysts said that was
worrying given strong growth in the region, but added it was not
certain it was the start of a trend. []
"I expected higher growth, especially looking at other
output figures like those in the Czech Republic, and the demand
that is coming from Germany, primarily," said Raiffeisen Bank
analyst Zoltan Torok.
"However, I would not read too much into these figures,
monthly figures can show pretty big swings, and they have
throughout 2010. Still, this number is unsettling, and I hope
that the next one dispels worries."
Currencies are expected to gain over the year as a whole
thanks to growing economic growth and trade, along with tighter
interest rate policy. <CEEFXPOLL>
In Romania, still struggling with recession, the economy
could grow by 1.5 percent this year, International Monetary Fund
mission chief Jeffrey Franks said on Tuesday. []
Analysts said a new precautionary aid deal was a boost for
markets but that the central bank's ability to ease monetary
policy was still clouded by the inflation outlook.
"So for the time being the central bank's dilemma remains in
place, and as a result EUR-RON is likely to continue its
sideways trade," Commerzbank said.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 23.999 24.078 +0.33% +4.17%
Polish zloty <EURPLN=> 3.871 3.878 +0.18% +2.25%
Hungarian forint <EURHUF=> 268.11 268.32 +0.08% +3.68%
Croatian kuna <EURHRK=> 7.414 7.409 -0.07% -0.46%
Romanian leu <EURRON=> 4.25 4.258 +0.19% -0.4%
Serbian dinar <EURRSD=> 103.31 103.427 +0.11% +2.53%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -2 basis points to 41bps over bmk*
7-yr T-bond CZ7YT=RR +1 basis points to +76bps over bmk*
10-yr T-bond CZ9YT=RR +1 basis points to +81bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -4 basis points to +362bps over bmk*
5-yr T-bond PL5YT=RR -3 basis points to +334bps over bmk*
10-yr T-bond PL10YT=RR -1 basis points to +300bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +1 basis points to +501bps over bmk*
5-yr T-bond HU5YT=RR +4 basis points to +459bps over bmk*
10-yr T-bond HU10YT=RR +1 basis points to +403bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1121 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet, editing
by Catherine Evans)
