* Fx flat to weaker after U.S. data.
# Czech crown gives up gain, Hungarian bonds retreat
* Cbank meetings to be watched
(Recasts with market developments, new comments.)
WARSAW/BUDAPEST, July 31 (Reuters) - Central European
currencies closed flat or slightly weaker on Friday after a
month of firming, with sentiment seen remaining positive ahead
of a batch of indicators and central bank meetings next week.
The European Union's export-reliant eastern members will
publish further key economic figures including purchasing
manager indices, industrial and foreign trade data next week,
and the Czech and Romanian central bank will hold rate meetings.
Second-quarter U.S. gross domestic product data published
during late trade carried mixed signals for the markets of the
export-reliant region, but are expected to help maintain a
cautiously optimistic sentiment, market participants said.
"Even if there will be no big rallies in the next week (in
the region), on balance there will be a positive sentiment,"
said Zsolt Papp, emerging market strategist at KBC in London.
"Of course much will depend on the central bank decisions."
Hungary's forint <EURHUF=> and Poland's zloty <EURPLN=> were
flat against the euro at 1400 GMT, the Czech crown <EURCZK=>
shed 0.1 percent and the Romanian leu <EURRON=> 0.3 percent.
The region's stock markets were mixed after strong gains
this month. The Czech <> index firmed more than 3 percent as
the Prague stock exchange posted its biggest monthly rise since
at least 2001 with an almost 19 percent gain.
Investors in the region are weighing concerns about growth,
financing and budgets with signs of better economic performance
in some states. But the Czech crown <EURCZK=> was little moved
after the slide of domestic industry slowed to 12.3 percent
year-on-year in June.
The crown slipped in late trade before edging back to bid a
shade down on the day. Bonds stayed quiet as investors start
looking to next week's central bank meeting, with expectations
of rates being held gaining momentum after the industrial data.
"Investors need to see clearer signs of improvement," said
CSOB trader David Sykora. "We are still having problems with
exports at low levels."
"We still have to watch things on a global scale," he added.
Romania' leu weakened more than its peers. Dealers said this
may have been because of provisions built by banks at the end of
the month for their non-performing euro-denominated loans.
"This may be because of higher demand for euros for the
end-month bad debt provisions," one dealer in Bucharest said.
BONDS RETREAT
Hungarian government bonds retreated from morning gains.
Polish bonds also gave up some of their gains after the finance
ministry announced relatively high debt supply [],
but overall market sentiment remained positive, dealers said.
"The supply made the buyers realise they will still have
some time to buy, so the market is now slighlty below the
highest levels of the day," said one Warsaw-based debt dealer.
Market participants were mixed over the short-term prospects
of the zloty, the top gainer in the region in July.
"If all goes on like this, we think the zloty could break
the level of 4.0 against the euro in two, maybe three weeks,"
said a Warsaw-based FX dealer.
But KBC's Papp said the zloty was probably overbought, while
other currencies in the region still had room to firm.
"In Hungary there is more room for (central bank) rate cuts
and this might make Hungarian bonds more interesting for
investors," he said. "Hungarian bond supply can be relatively
limited later this year, rate cuts are expected and the demand
on bonds may put an appreciation pressure on the forint."
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.602 25.571 -0.12% +4.5%
Polish zloty <EURPLN=> 4.154 4.153 -0.02% -0.94%
Hungarian forint <EURHUF=> 266.5 266.66 +0.06% -1.11%
Croatian kuna <EURHRK=> 7.363 7.349 -0.19% +0.03%
Romanian leu <EURRON=> 4.215 4.202 -0.31% -4.76%
Serbian dinar <EURRSD=> 92.917 93.023 +0.11% -3.7%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +29 basis points to 146bps over bmk*
4-yr T-bond CZ4YT=RR -5 basis points to +165bps over bmk*
8-yr T-bond CZ8YT=RR +13 basis points to +286bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -2 basis points to +371bps over bmk*
5-yr T-bond PL5YT=RR +3 basis points to +297bps over bmk*
10-yr T-bond PL10YT=RR +8 basis points to +275bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -21 basis points to +686bps over bmk*
5-yr T-bond HU5YT=RR -55 basis points to +615bps over bmk*
10-yr T-bond HU10YT=RR -38 basis points to +533bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1600 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Kuba
Jaworowski/Sandor Peto; editing by Patrick Graham/Victoria Main)
