* Polish exports strong despite recent zloty rally
* Crown bounces off 2-week low, rate cuts still eyed
* FX up on higher risk appetite, econ outlook
(Adds Polish output, quote)
By Jason Hovet and Marius Zaharia
PRAGUE/BUCHAREST, April 20 (Reuters) - Central European
currencies firmed on Tuesday, as Polish industry data for March
showed exports remained strong despite a firming zloty and
German data pointed to a better outlook for the region.
The zloty <EURPLN=> had gained 2.2 percent against the euro
in March alone and almost 6 percent since the start of the year,
a pace which has raised worries about economic recovery and
triggered a central bank intervention earlier this month.
But data on Tuesday showing industrial output rose more
sharply than expected last month have eased some of these
concerns [].
"Such a good reading was an effect of the good condition of
the manufacturing sector, which is backed by relatively strong
exports," said Lukasz Wojtkowiak, FX strategist at Millennium
Bank in Warsaw.
"The recent zloty strengthening did not affect the data, as
some part of the market had feared before."
At 1414 GMT, the zloty was 0.4 percent stronger on the day,
Hungary's forint <EURHUF=> and Romania's leu <EURRON=> were 0.3
percent firmer, while the Czech crown <EURCZK=> was a touch up.
The zloty was not immediately affected by the output data as
sentiment was already boosted by a good ZEW survey that helped
investors anticipate a strong output reading.
Most of the gains occurred in early trade when data showed
analyst and investor sentiment in Germany, central Europe's main
trade partner, surged in April, gaining for the first time since
September and brightening the region's outlook. []
"Significantly better German ZEW survey at 53.0 is an
encouraging signal and should offer the region support," 4Cast
analyst Piotr Matys said.
Currencies rebounded from Monday's losses. But dealers said
investors remained cautious on riskier assets, especially given
persistent worries about debt-ridden Greece and its stand-by aid
package. [] []
A Greek T-bill auction, the third debt sale since the
European/IMF safety net for Greece was agreed, was covered but
the yield rose.
HUNGARIAN RATE CUT EYED
Central European bonds rebounded slightly on Tuesday.
Hungarian bonds have been among the best performers this
year thanks to easing monetary policy. The central bank will
hold its next rate-setting meeting on Monday and is widely
expected to cut its 5.5 percent base rate further.
The meeting will come a day after the second round of an
election, which is expected to give the centre-right Fidesz
party a parliamentary majority and provide another boost to
markets.
Currencies, bonds and stocks in central Europe have all
mostly jumped to their strongest levels in months this year.
Czech bonds were mixed, but mostly higher on Tuesday. A
rally since the middle of March has shaved around 50 basis
points off the 10-year bond <CZ10YT=RR> yield to 3.639 percent.
The crown bounced, after falling to a two-week low hit in
the previous session when dovish comments from central bank
Vice-Governor Mojmir Hampl added to expectations that rate cuts
were not over. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.309 25.334 +0.1% +3.99%
Polish zloty <EURPLN=> 3.883 3.898 +0.39% +5.69%
Hungarian forint <EURHUF=> 264.58 265.27 +0.26% +2.18%
Croatian kuna <EURHRK=> 7.255 7.255 0% +0.75%
Romanian leu <EURRON=> 4.145 4.158 +0.31% +2.23%
Serbian dinar <EURRSD=> 99.389 98.72 -0.67% -3.53%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +3 basis points to 59bps over bmk*
7-yr T-bond CZ7YT=RR +6 basis points to +63bps over bmk*
10-yr T-bond CZ10YT=RR +5 basis points to +56bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -3 basis points to +354bps over bmk*
5-yr T-bond PL5YT=RR -3 basis points to +293bps over bmk*
10-yr T-bond PL10YT=RR -3 basis points to +243bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -10 basis points to +429bps over bmk*
5-yr T-bond HU5YT=RR -6 basis points to +367bps over bmk*
10-yr T-bond HU10YT=RR -3 basis points to +335bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1714 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet and
Marius Zaharia; editing by Stephen Nisbet)
