CEE MARKETS 2-Zloty hits session high after GDP, stocks jump

                                
 * GDP data sends zloty to day's high, WIG20 jumps
                                
 * Crown, Czech bonds shake off output, budget woes
                                
 
 (Recasts with Polish GDP)
                                
 By Jason Hovet
                                
 PRAGUE, Aug 28 (Reuters) - The Polish zloty rose to session
highs on Friday after posting stronger-than-expected growth in
the second quarter, the latest data showing central Europe may
have exited the worst of the economic crisis.
                                
 Poland, the region's largest economy, grew 1.1 percent
year-on-year between April and June, double the pace analysts
expected and confirming a figure indicated to Reuters by a
government source late on Thursday. [ID:nWAR010701]
[ID:nN27328851]
                                
 The zloty <EURPLN=> jumped as much as 0.4 percent after the
data, and by 0843 GMT bid up 0.9 percent on the day at 4.081 to
the euro, propping up regional peers with it. Polish bond yields
showed little change, dealers said.
                                
  "I assume the next quarters will bring similar GDP growth.
This confirms that Poland's economy is quite resilient thanks to
its smaller exposure to exports and the smaller role of credit
in the Polish economy," said Piotr Bujak, senior economist at BZ
WBK Bank.
                                
 Warsaw's blue chip index <.WIG20> extended gains to 3.5
percent with the data and led around 1-3 percent gains in the
rest of the region's bourses.
                                
 Hungary's forint <EURHUF=> rose 0.67percent to 269.12 per
euro and the Czech crown <EURCZK=> edged up 0.4 percent, while
Romania's leu <EURRON=> was a touch up at 4.215.
                                
 
                                
 MORE SIGNS
                                
 Still, investors have become more cautious in markets as
they look for more signs of economic recovery after a summer
rally that boosted the zloty by more than 9 percent and the
forint almost 4 percent on the back of improving economic
signals in the euro zone and the region itself.
                                
 Late on Thursday, the forint had eased over 1 percent after
central banker Tamas Banfi told Reuters Hungary needed much
lower interest rates and a weaker currency to facilitate a
faster recovery from its deep recession. [ID:nLR136164]
                                
 And Czech industrial data on Friday showed the path to
recovery would be rocky. Output dropped by a more-than-expected
18.4 percent year-on-year in July, accelerating from a 12.2
percent fall in June to show the lag with the west is still
deep. [ID:nLS137302]
                                
 Analysts said scrap subsidies in the west that had boosted
car exports have started to fade, and dealers also said markets
still seem split if the worst had passed.
                                
 "The market is still divided in this thinking," a Prague
fixed income dealer said. "We still have overcapacities and
unemployment is rising."
                                
 Czech money market rates were a touch up on the short end of
the curve on Friday, continuing their recent upward moves.
                                
 Bonds reacted little to news Friday the Czech finance
ministry would have to propose a 2010 budget at the higher end
of its range, corresponding to 7 percent of GDP, as dealers said
the figure was already mostly priced in. [ID:nLS523431]
                                
 
--------------------------MARKET SNAPSHOT--------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2009 
Czech crown      <EURCZK=>   25.35    25.458  +0.43%   +5.53%
Polish zloty     <EURPLN=>    4.081    4.117  +0.88%   +0.83%
Hungarian forint <EURHUF=>  269.12   270.88   +0.65%   -2.07%
Croatian kuna    <EURHRK=>    7.353    7.335  -0.24%   +0.16%
Romanian leu     <EURRON=>    4.215    4.221  +0.14%   -4.76%
Serbian dinar    <EURRSD=>   93.119   93.227  +0.12%   -3.91%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR    -4 basis points to  70bps over bmk*
4-yr T-bond   CZ4YT=RR   +20 basis points to  +152bps over bmk*
8-yr T-bond   CZ8YT=RR   +13 basis points to  +266bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR   +7 basis points to  +638bps over bmk*
5-yr T-bond   HU5YT=RR   +20 basis points to  +584bps over bmk*
10-yr T-bond   HU10YT=RR +5 basis points to  +492bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1045 CET.
Currency percent change calculated from the daily domestic 
close at 1500 GMT.
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 (Reporting by Reuters bureaus, writing by Jason Hovet; Editing
by Chris Pizzey)