* FX, stocks mostly firm, but risk appetite fragile
* Forint, Hungary bonds weaken on uncertainty over IMF deal
* Investors to assess local econ recovery signs next week
(Recasts with new prices, comments)
By Dagmara Leszkowicz and Sandor Peto
WARSAW/BUDAPEST, Aug 27 (Reuters) - Hungary's forint bucked
a rebound in central European assets on Friday and Hungarian
bonds also extended losses amid uncertainty over the country's
long-term financing policy and the global economic outlook.
The forint <EURHUF=> eased 0.3 percent against the euro and
was bid at 284.3 to the euro at 1429 GMT. The Czech crown
<EURCZK=> and the Romanian leu <EURRON=> firmed 0.1 percent to
24.798 and 4.242 respectively, while the Polish zloty <EURPLN=>
dipped 0.1 percent to 3.984.
The forint underperformed the region's other main currencies
over the week -- which started with a bout of global risk
aversion -- shedding 2 percent against the euro.
Confusing signals from the government this week about new
talks with the IMF in the autumn have dampened sentiment on
Hungarian assets. Hungarian government bond yields rose by
around 70 basis points over the week from three-month lows hit
last week as 3- and 5-year yields added 7-17 basis points and
10-year yields gained 29 basis points on Friday. Three-year
yields were at 7.10 percent.
Traders said some foreigners continued to sell. Domestic
players were unwilling to buy at current yields as bonds in the
euro zone periphery also eased and because of concern about the
government's stance on aid from the IMF.
"You can read from the Hungarian government bond holding
figures of foreigners <.HUBONDHOLD> that probably foreign prop
desks, speculative players, bought into the bond auctions when
yields fell (in July and August)," one trader said.
"They are selling now," the trader added. "The trend will
depend on the international mood and the euro/forint -- if it
weakens through 286, then 290 is the next ... domestic players
would not buy long-term bonds below 7.8-8.0 percent (yields)
now."
Hungary smoothly sold the offered amount of bonds at an
auction on Thursday, but yields rose and demand fell.
Hungary said this week its autumn talks with the IMF would
not lead to a new aid deal, raising market concerns about its
ability to finance itself solely from the market from 2011.
[]
GLOBAL, REGIONAL GROWTH GAUGED
The Czech crown -- which often plays the role of a regional
safe haven when other currencies fall -- gained about 0.2
percent against the euro over the week.
On Thursday and Friday the region's stock markets regained
some of the losses suffered over the week.
But revised U.S. GDP data released on Friday, even though
not quite as weak as feared, left concerns that the global
economy might be heading into a double-dip recession which would
curb appetite for emerging market assets, dealers said.
U.S. Federal Reserve Chairman Ben Bernanke said late in the
day that recovery had softened more than expected and the Fed
was ready to take further steps if needed.
Central European markets are poised for a heavy flow of
economic data next week, including purchasing manager indices
and second-quarter economic output figures from Poland, the
region's biggest and best-performing economy.
"(Polish) data should be consistent with the Monetary Policy
Committee's wait-and-see approach as its expectations are for
flat GDP growth (slightly above 3 pct year-on-year) in upcoming
quarters," analysts at ING bank wrote in a note.
The Polish central bank kept interest rates unchanged this
week for the 14th consecutive month, but signalled that
inflation is likely to accelerate in coming months, reinforcing
expectations of near-term monetary policy tightening.
Dealers said the zloty would also be supported by continued
privatisation inflows.
Serbia's central bank continued to sell euros to defend the
dinar <EURRSD=>, which has lost nearly 9 percent this year.
[]
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.789 24.819 +0.12% +6.17%
Polish zloty <EURPLN=> 3.984 3.981 -0.08% +3.01%
Hungarian forint <EURHUF=> 284.3 283.5 -0.28% -4.91%
Croatian kuna <EURHRK=> 7.276 7.28 +0.05% +0.46%
Romanian leu <EURRON=> 4.242 4.248 +0.14% -0.11%
Serbian dinar <EURRSD=> 104.97 105.063 +0.09% -8.66%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +3 basis points to 96bps over bmk*
7-yr T-bond CZ7YT=RR -6 basis points to +108bps over bmk*
10-yr T-bond CZ9YT=RR -1 basis points to +101bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +3 basis points to +630bps over bmk*
5-yr T-bond HU5YT=RR +13 basis points to +601bps over bmk*
10-yr T-bond HU10YT=RR +29 basis points to +519bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1629 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Dagmara
Leszkowicz/Sandor Peto; Editing by Susan Fenton)
