* German, central European GDP data hits currencies
* Economies contract more sharply than expected
* Emerging stocks rise, still down on the week
By Peter Apps
LONDON, May 15 (Reuters) - Emerging currencies fell on
Friday hit by sharper-than-expected economic contraction in
Germany and Central and Eastern Europe, while emerging
stockmarkets rallied on broader global risk appetite.
Worse-than-forecast German gross domestic product data --
showing a 3.8 percent contraction in the first quarter --
weighed on sentiment across the board [], dragging
down emerging currencies, particularly those most exposed to
trade with Western Europe's largest economies.
The Hungarian, Romanian, Slovak and Czech economies all
posted larger-than-expected falls in the first quarter, also
prompting currencies to buck the general rise in risk appetite
to sink lower.
"The real story today is the GDP data," said Lars
Christensen, head of emerging markets research at Danske Bank.
"It shows that the recession in Central and Eastern Europe will
be worse than expected and it will put real pressure on the
budget positions. Central and Eastern Europe are the worst
affected by the crisis and they are underperforming despite
better signs on the global economy."
By 1215 GMT, the Czech crown <EURCZK=> was down 0.60 percent
against the broadly weaker euro, the Polish zloty <EURPLN=> down
0.50 percent, the Hungarian forint <EURHUF=> down 0.38 percent
while the Romanian leu <EURRON=> lost 0.60 percent.
Data showed Hungary and Romania's economy is both slumping
by an annual 6.4 percent, Slovakia contracting 5.4 percent and
the Czech economy record in a record 3.4 percent fall in the
first quarter.
SIGNS OF LIFE?
Some dealers and analysts said they were surprised currency
reaction was not even sharper.
"The data out this morning was terrible," a Central European
currency dealer in Stockholm said. "But it's already been a
rough week... and people are reluctant ahead of the weekend."
But as the European Bank for Reconstruction and Development
(EBRD) began its annual meeting in London, its president Thomas
Mirrow was quoted as saying Central and Eastern Europe could
look forward to the beginning of the end of their financial
crisis []
"Banks are reporting better results than expected and
confidence indicators are starting to point upwards again," the
Financial Times quoted him as saying.
South Africa's rand <ZAR=> lost 0.73 percent against the
dollar, while the Turkish lira <TRY=> fell 0.32 percent, with
traders again blaming the German GDP numbers for much of the
fall.
In contrast, emerging equities were more buoyant.
Benchmark emerging equities <.MSCIEF> were up 1.10 percent ,
up some 25 percent on the year having rallied since mid-March on
a recovery in global risk appetite helped by a recent fall in
the dollar making emerging assets more appealing.
However, they finished down for the week for the first time
since March after a general worldwide sell-off earlier in the
week on worries over global economic recovery.
All major bourses in the region were up. Romanian stocks
<> were the largest gainer, up 4.22 percent with Turkey
<> up 1.54 percent and stocks in the Czech Republic <>
gaining 2.12 percent.
But emerging sovereign debt spreads <11EMJ> showed a more
mixed picture, widening four basis points to 505 over US
Treasuries, denoting a very modest fall in appetite for emerging
debt.
