CEE MARKETS 2-Currencies slip but may resume gains on stocks

                                
 PRAGUE, Nov 3 (Reuters) - Central European currencies 
slipped against the euro on Monday following very negative
manufacturing news from Poland and the Czech Republic, but
dealers said rising stock markets could perhaps fuel gains.
                                
 Hungary's forint <EURHUF=> traded 0.7 percent lower against
the euro at 258.17. The Czech crown <EURCZK=> slipped 0.6
percent to 24.18 and Romania's leu <EURRON=> was down 0.7 to
3.67.The zloty dipped 0.4 percent lower to 3.547 per euro. 
                                
 The outlook for Czech and Polish manufacturing plunged
further last month as the central European economies suffer from
the slump in western markets, manufacturing surveys showed.
                                
 The Czech Purchasing Managers' Index (PMI) fell for the
seventh month running to 41.2, well below the 50 point mark that
indicates a contraction over the previous month. Poland hit a
series low of 43.7.
                                
 Analysts said the data opened the way to lower interest
rates in both countries.
                                
 "The latest data shows the sort of negative trend we expect
for the next few months," said Ivailo Vesselinov, emerging
markets analyst at Dresdner Kleinwort.
                                
 "We expect a recession in the euro zone next year, and
significant slowdown but not outright recession yet in the
CEE4."
                                
 Dealers said volumes, battered as investors ditched emerging
assets in the global financial crisis, would remain low and
volatility high.
                                
 "Volatility will remain the keyword for the week. Last week,
when some expected the forint to go under 250, it shot above
260, so don't trust anybody who makes a prediction," said a
Budapest-based dealer.
                                
 Stock markets across the region improved slightly. The
Prague Stock Exchange <.PX> was up over 2 percent at 0815 GMT,
while Poland's <.WIG> was up 0.7 percent.
                                
 Serbia's dinar gained 0.3 percent in early after the central
bank raised its key policy rate by two percentage points to
17.75 percent.
                                
 Croatia's kuna also inched up to be bid at 7.152 per euro,
and analysts said a high interest rate differential with the
euro zone could keep it attractive to investors.
                                
 There was very little activity in the Hungarian bond market
early on Monday, and yields were unchanged from Friday's levels,
a fixed income trader said. The market has virtually ground to a
halt due to the credit crisis.
                                
 News that the central bank would buy 10 billion forints each
worth of 2009/F, 2010/C and 2011/C government bonds from primary
dealers had no tangible impact on the market, he said.
                                
 Polish 5-year and 10-year paper yields were down, while
there was no trade on 2-yr bonds and analysts said the market
will eye global sentiment.

----------------------MARKET SNAPSHOT-------------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2008 
Czech crown      <EURCZK=>   24.175  24.035   -0.58%   +8.76%
Polish zloty     <EURPLN=>   3.547   3.5337   -0.38%   +1.49%
Hungarian forint <EURHUF=>   258.17  256.35   -0.71%   -2.1%
Croatian kuna    <EURHRK=>   7.152   7.1658   +0.19%   +2.38%
Romanian leu     <EURRON=>   3.67    3.643    -0.74%   -2.51%
Serbian dinar    <EURRSD=>   84.287  84.547   +0.31%   -7.02%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond   CZ3YT=RR   +21 basis points to  196bps over bmk*
5-yr T-bond   CZ5YT=RR    -18 basis points to  +186bps over bmk*
10-yr T-bond   CZ9YT=RR   +18 basis points to  +172bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR    -43 basis points to  +461bps over bmk*
5-yr T-bond   PL5YT=RR    -22 basis points to  +427bps over bmk*
10-yr T-bond PL10YT=RR    -39 basis points to  +350bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR    -1 basis points to  +1054bps over bmk*
5-yr T-bond   HU5YT=RR    0 basis points to  +953bps over bmk*
10-yr T-bond   HU10YT=RR +2 basis points to  +685bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 0835 GMT.
Currency percent change calculated from the daily domestic 
close at 1500 GMT.

                                
 
For related news and prices, click on the codes in brackets: All
emerging market news [EMRG]
Spot FX rates
Eastern Europe spot FX <EEFX=>    Middle East spot FX <MEFX=>
Asia spot FX <ASIAFX=>       Latin America spot FX <LATAMFX=>
Other news and reports  
World central bank news [CEN]  Economic Data Guide <ECONGUIDE> 
Official rates [GLOBAL/INT]  Emerging Diary [EMRG/DIARY] 
Top events [M/DIARY]  Diaries [DIARY] Diaries Index [IND/DIARY] 
 (Reporting by Reuters bureaus, writing by Jason Hovet and
Victoria Main)