CEE MARKETS 2-Crown up with peers as Czechs exit recession

                                
 * Currencies pause after gains, bonds mixed
                                
 * Crown unmoved by Q/Q rise in Q2 Czech GDP
                                
 * Stocks up, but Budapest's <.BUX> hit by OTP results
                                
 
  (adds stocks, fixed income)
                                
 By Marius Zaharia
                                
 BUCHAREST, Aug 14 (Reuters) - Central European currencies
firmed slightly on Friday but stayed within recent ranges, with
the Czech crown showing little impact from a surprise rise in
second quarter GDP due to a revival in its main export market.
                                
 The Czech economy grew 0.3 percent from the previous three
months [ID:nPRA004705], data showed, in line with a rise in
Germany and France reported on Thursday [ID:nLD498855], ending
half a year of recession. 
                                
 On an annual basis, however, GDP fell 4.9 percent and
analysts said the previous day's numbers had flagged the
quarterly rise.
                                
 "The quarterly (Czech) growth is no surprise, it reflects
the development in the euro zone," said Martin Lobotka, analyst
at Ceska Sporitlena. "It would have been a surprise before the
European data yesterday."
                                
 At 0903 GMT, the Czech crown <EURCZK=>, the Polish zloty
<EURPLN=> and the Hungarian forint <EURHUF=> were 0.2-0.4
percent up, while the Romanian leu <EURRON=> was flat.
                                
 "Investors are taking a breather after a rally caused by the
Fed and the euro GDP data," one dealer in Bucharest said. "There
is some profit taking, the region looks rangebound."
                                
 Equity markets rose on Friday, but for the Budapest Stock
exchange, whose BUX index <.BUX> was pulled down by OTP Bank's
<OTPB.BU> results [ID:nLD182455].
                                
 Debt markets were mixed. In Hungary, yields rose by about 5
basis points in a quiet market, waiting for more clues about the
next rate move of the country's unpredictable central bank.
                                
 In Poland, bond prices took back some of Thursday's losses,
caused by higher than expected inflation figure that prompted
markets to start pricing in rate hikes in 2010.
                                
 Czech bonds were quiet after the GDP release, although
dealers said a fall in euro bond yields kept the Czech curve
well bid.
                                
 Romania plans to sell 300 million euros in 4-year treasury
bonds via public subscription on Friday, its first such move
since 2004, in an attempt to ease supply pressure on its
domestic debt market.
                                
 
                                
 SLOW MOTION
                                
 Central and eastern Europe still faces major economic
problems. On Thursday, Hungary and Romania reported
bigger-than-expected contractions in gross domestic product in
the second quarter, while Czech retail sales also bode poorly
for domestic demand. [ID:nLD517467]
                                
 Any recovery will be slow, analysts said, because rising
unemployment will hit domestic consumption, while this year's
slump in tax revenue will have to be addressed by tighter,
growth-limiting fiscal policies.
                                
 "Even if better than May, the worse than expected June Czech
retail sales, Q2 Hungarian GDP and Romanian GDP highlight the
main risk we see ... namely a difficult consumption and
unemployment backdrop," Cheuvreux said in a note.
                                
 The Czech central bank also raised its public sector deficit
forecast to 5.1 percent of GDP from 4.3 percent [ID:nPRA004707],
highlighting the region's fiscal burden.
                                
 In Hungary, industrial output fell by an annual 18.8 percent
in June, more than a preliminary estimate. [ID:nBUD005097]
----------------------MARKET SNAPSHOT-------------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2009 
Czech crown      <EURCZK=>  25.711   25.771  +0.23%    +4.05%
Polish zloty     <EURPLN=>   4.116    4.129  +0.32%    -0.02%
Hungarian forint <EURHUF=> 268.53   269.53   +0.37%    -1.85%
Croatian kuna    <EURHRK=>   7.305    7.318  +0.18%    +0.82%
Romanian leu     <EURRON=>   4.21     4.207  -0.07%    -4.65%
Serbian dinar    <EURRSD=>  93.42    93.337  -0.09%    -4.22%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR   +9 basis points to  63bps over bmk*
4-yr T-bond   CZ4YT=RR   +16 basis points to  +148bps over bmk*
8-yr T-bond   CZ8YT=RR   +12 basis points to  +258bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR   +6 basis points to  +362bps over bmk*
5-yr T-bond   PL5YT=RR   +3 basis points to  +305bps over bmk*
10-yr T-bond PL10YT=RR   +1 basis points to  +274bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR   +5 basis points to  +679bps over bmk*
5-yr T-bond   HU5YT=RR   +7 basis points to  +609bps over bmk*
10-yr T-bond   HU10YT=RR +11 basis points to  +527bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1203 CET.
Currency percent change calculated from the daily domestic 
close at 1600 GMT.
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 (Reporting by Reuters bureaux, writing by Marius Zaharia;
Editing by Patrick Graham)