* Hungary budget watched, forint trails
* Czech, Romanian currencies boosted by data
(Adds stocks, bond quotes, analyst)
PRAGUE, Nov 8 (Reuters) - The forint and Polish zloty
slipped on Monday, with euro weakness holding emerging Europe
back while fiscal concerns also weighed on the Hungarian
currency.
Romanian industrial output rose in September, data showed,
and output growth in the Czech Republic was stronger than
expected, giving a slight boost to those countries' currencies.
The U.S. Federal Reserve's decision last week to buy $600
billion in U.S. Treasury bonds in a second round of quantitative
easing gave a boost to emerging Europe, but the region has since
given up some gains as the euro, its main reference currency,
has weakened.
According to a Reuters poll published last Wednesday, the
region's currencies are expected to gain over the next year
thanks to an economic recovery and rising investor flows into
emerging markets as a result of the Fed easing. []
The forint <EURHUF=> dropped 0.4 percent to bid at 274.93 to
the euro by 0912 GMT on Monday, and the zloty <EURPLN=> lost 0.3
percent to 3.926 per euro.
"The Hungarian budget consolidation is becoming increasingly
bizarre," Commerzbank said in a note.
"Today's publication of the current budget balance is likely
to shed new light on the situation. The uncertain financing
outlook, as well as the related threat of the country's credit
rating being downgraded, constitute negative factors for the
forint."
Hungary will release October budget data later in the day
and investors will look to see whether the deficit is heading
toward the 3.8 percent of economic output goal after the
September budget exceeded that target by 25 percent.
Prodded by international lenders, Hungary has targeted a
comparatively low budget gap for this year and 2011.
Analysts have criticised next year's budget for containing
little detail on spending reforms and focusing on one-off
revenue items like windfall taxes and the takeover of private
pension funds. []
BETTER ECONOMY
The Czech crown <EURCZK=> and Romanian leu <EURRON=> bucked
the trend with a rise of less than 0.1 percent. Stock markets
rose up to 0.2 percent with only Bucharest <> dropping, by
1 percent.
The solid Czech and Romanian industrial data followed a rise
in Hungary on Friday that was boosted by exports. Central
Europe's economies are highly geared toward trade in the euro
zone, especially Germany.
The Czech economy especially has benefited from better
economic figures out of Germany, though analysts caution there
may be a slowdown ahead.
"While positive surprises are prevailing at the headline
level, a closer look at details indicates that Czech annual GDP
growth dynamics are likely to decelerate in the fourth quarter
of this year and the first half of 2011," said Radomir Jac,
chief analyst at Generali PPF Asset Management, citing, for one,
slipping export growth.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.559 24.563 +0.02% +7.16%
Polish zloty <EURPLN=> 3.926 3.913 -0.33% +4.53%
Hungarian forint <EURHUF=> 274.93 273.85 -0.39% -1.67%
Croatian kuna <EURHRK=> 7.352 7.347 -0.07% -0.58%
Romanian leu <EURRON=> 4.286 4.288 +0.05% -1.13%
Serbian dinar <EURRSD=> 106.95 106.97 +0.02% -10.35%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +6 basis points to 90bps over bmk*
7-yr T-bond CZ7YT=RR +5 basis points to +102bps over bmk*
10-yr T-bond CZ9YT=RR -1 basis points to +112bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1013 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, John Stonestreet)
