* FX bounce on US data, but market stays volatile
* Polish yields steady after strong switch sale
(Updates throughout)
By Jason Hovet and Dagmara Leszkowicz
PRAGUE/WARSAW, Oct 29 (Reuters) - Central European
currencies rebounded from multi-month lows on Thursday and
stocks reversed losses after investors bought up riskier assets
following data showing a recovering U.S. economy.
The world's biggest economy grew for the first time in more
than a year, boosting assets from the export-reliant central
Europe which has struggled with faltering growth and rising
budget shortfalls and joblessness.
"The data let the euro rebound against the dollar and as a
result boosted emerging Europe's currencies," said Jakub
Wiraszka, dealer at BRE bank in Warsaw.
At 1355 GMT the Hungarian forint <EURHUF=> and Polish zloty
<EURPLN=> led gains with 0.8 percent rise, while the Czech crown
<EURCZK=> gained 0.5 percent as currencies recovered from sharp
selling this week amid an emerging market pullback.
In Romania, the leu <EURRON=> kept pace to recover from its
first jolt in a month on Wednesday. Prolonged political
wrangling to form a new government coupled with investor fear of
central bank intervention has paralysed the currency this month.
Stocks in the region also rebounded after the previous falls
with Budapest BUX <> up 1.5 percent. Only Prague's PX <>
lagged behind falling some 2.2 percent after sitting out a
selloff on Wednesday due to a market holiday.
"I still think that the equity rally has got exhausted and
the sizeable price falls in the past days indicated that," said
one Budapest-based dealer.
Currencies have corrected from gains this month, and
analysts see the possibility that a gradual rally that has
lifted the zloty and forint 9 percent since March might be near
an end as a global market recovery has started to sputter.
RATES VIEW
The Czech crown has shed 4 percent this month worsened by
talk of interest rate cuts by central bank Governor Zdenek Tuma
and Vice-Governor Miroslav Singer, which has impacted markets
although their colleagues have not voiced support and analysts
see rates unchanged next week. []
Differing interest rates are one point that may
differentiate between currencies in the region as markets
correct, with the forint <EURHUF=> and Romania's leu <EURRON=>
also in the firing line given expectations of more rate cuts.
Poland's central bank kept its main interest rate unchanged
at a record low of 3.5 percent on Wednesday.
Governor Slawomir Skrzypek said on Thursday the central bank
gave a clear signal it had shifted from its long-held easing
bias, adding support for the zloty. []
Strategists have been most bullish on the zloty, although
they say pressure could stay as the country struggles to rein in
budget gaps and debt while counting on privatisation plans that
have fell short this year. []
A Polish switch tender was unruffled by this on Thursday
when the finance ministry sold 4.62 billion zlotys in
longer-dated bonds in exchange for papers maturing in 2009 and
2010. But yields were little moved after the sale.[]
Czech bonds pared earlier losses caused by currency
weakness. The finance ministry forecast a return to growth in
2010 despite the impact of a government austerity package that
will cut the country's deficit from this year. []
Markets also reacted little to news that bond issuance in
2010 will stay near this year's levels. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.402 26.545 +0.54% +1.33%
Polish zloty <EURPLN=> 4.245 4.281 +0.85% -3.06%
Hungarian forint <EURHUF=> 272.64 274.92 +0.84% -3.33%
Croatian kuna <EURHRK=> 7.228 7.225 -0.04% +1.9%
Romanian leu <EURRON=> 4.303 4.324 +0.49% -6.71%
Serbian dinar <EURRSD=> 93.19 93.183 -0.01% -3.98%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -15 basis points to 81bps over bmk*
7-yr T-bond CZ7YT=RR -7 basis points to +95bps over bmk*
10-yr T-bond CZ10YT=RR -3 basis points to +92bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -4 basis points to +371bps over bmk*
5-yr T-bond PL5YT=RR -7 basis points to +324bps over bmk*
10-yr T-bond PL10YT=RR -6 basis points to +286bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -6 basis points to +548bps over bmk*
5-yr T-bond HU5YT=RR -7 basis points to +483bps over bmk*
10-yr T-bond HU10YT=RR -6 basis points to +419bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1545 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 and
Dagmara Leszkowicz; Editing by Andy Bruce
