CEE MARKETS 1-Currencies pause, waiting for Polish data

By 0712 GMT, the Polish zloty <EURPLN=> and the Czech crown <EURCZK=> were virtually flat from the previous close, while the Hungarian forint <EURHUF=> was down 0.2 percent and Romania's leu <EURRON=> was 0.3 percent weaker.

Poland is expected to release June industrial output and producer prices at 1200 GMT and dealers said data will be a test for the whole region.

"If those come out badly, people will book this week's profit," another dealer said.

Central and eastern Europe is underperforming other emerging markets when risk appetite picks up, mostly because of worries over currency devaluations in the Baltics and over a frail banking sector burdened with foreign debt.

Also, help from the International Monetary Fund to countries such as Latvia, Hungary and Romania came along with requirements for tight fiscal policies which will weigh on a potential recovery of those economies.

The region's debt markets have been performing well on the back of an overall improvement in global mood in recent months, with yields falling significantly and demand strengthening, as showed by Poland's and Hungary's well-bid auctions this week.

Hungary expects to sell 1 billion euros of a five-year euro bond, an official at one of the lead managers said. The deal has attracted orders of around 1.75 billion euros and will be priced on Friday. [ID:nLG26256','yes')">ID:nLG642291, before hopping on a rollercoaster fuelled by strong earnings by JPMorgan and afterwards by poor results by a string of other U.S. firms.

On Friday, though, currencies lacked direction.

"Newsflow from outside is quite ok, banks in the U.S. start to make profit ... but on the other hand it is still too early to say it's all over," one dealer in Bucharest said.

"This region is still seen quite vulnerable, so until things become clearer it is on stand-by."

By 0712 GMT, the Polish zloty <EURPLN=> and the Czech crown <EURCZK=> were virtually flat from the previous close, while the Hungarian forint <EURHUF=> was down 0.2 percent and Romania's leu <EURRON=> was 0.3 percent weaker.

Poland is expected to release June industrial output and producer prices at 1200 GMT and dealers said data will be a test for the whole region.

"If those come out badly, people will book this week's profit," another dealer said.

Central and eastern Europe is underperforming other emerging markets when risk appetite picks up, mostly because of worries over currency devaluations in the Baltics and over a frail banking sector burdened with foreign debt.

Also, help from the International Monetary Fund to countries such as Latvia, Hungary and Romania came along with requirements for tight fiscal policies which will weigh on a potential recovery of those economies.

The region's debt markets have been performing well on the back of an overall improvement in global mood in recent months, with yields falling significantly and demand strengthening, as showed by Poland's and Hungary's well-bid auctions this week.