CEE MARKETS 2-Polish zloty leads gains as PMIs rise

                                
 * PMI rises in region, zloty jumps
                                
 * Stocks continue hot streak
                                
 * Czech bonds quiet after Sept issue calendar
                                
 
  (Updates with bonds, quotes, prices)
                                
 By Jason Hovet
                                
 PRAGUE, Aug 3 (Reuters) - A record rise in Polish factory
PMI lifted the Polish zloty to a 6-1/2 month high on Monday as
improved manufacturing outlooks kept a shine on central Europe's
currencies.
                                
 Purchasing managers' indices in Poland, the Czech Republic
and Hungary all rose to catch up with signs of economic
improvement in the euro zone, but still hovered below the 50
level that divides contraction from growth.
                                
 The zloty <EURPLN=> jumped 0.6 percent to bid at 4.117 to
the euro by 0940 GMT, its strongest level since mid-January,
while the Czech crown <EURCZK=> held steady.
                                
 Poland's PMI rose at a record pace in July to its highest in
more than a year. [ID:nL3583764] The Czech PMI inched up to a
10-month high in July, following an improvement in industrial
output figures last week. [ID:nL3690103]
                                
 "The data were good overall... but the most striking impact
was on the Polish zloty," said Societe Generale strategist
Gaelle Blanchard. 
                                
 "The (Polish) economic data has been better than expected
not only on the manufacturing side but in the household sector.
Poland is the country that has been most resilient," she added.
                                
 The Hungarian forint <EURHUF=> added 0.2 percent after its
PMI, compiled differently from others, rose to a touch below 50.
                                
 The Romanian leu <EURRON=> was steady around 4.21 per euro,
while central European stocks extended their winning run with
gains of around 2 percent on Monday. 
                                
 Investors have started taking stock of central Europe's
economies, though strategists warn the gains in central Europe's
currencies, stocks and bonds in the past two months risk moving
beyond fundamentals, especially as unemployment rises and budget
deficits balloon.
                                
 "But as long as you have strong momentum in risk appetite
globally, there is little to come in the way of further
strengthening. But we would be cautious on the extent of this
recovery," SocGen's Blanchard said.
                                
 
                                
 BONDS QUIET
                                
 Czech bonds were quiet on Monday with other debt markets in
the region, showing little reaction to the Finance Ministry's
September issuance calendar. [ID:nPRA004684]
                                
 Dealers there expect yields to move lower again this week
after tracking western yields down in recent sessions.
                                
 "Markets may speculate on rate cuts before the central bank
(this week)," Komercni Banka trader Dalimil Vyskovsky said.
                                
 The Czech central bank meets on Thursday, although a slim
consensus sees policymakers holding rates steady following the
improving economic indicators, and after Polish rate setters
kept rates unchanged last week.
                                
 In Romania, where the central bank convenes on Tuesday,
analysts expect a half point cut to bring interest rates in line
with Hungary at 8.5 percent.
                                
 Analysts expect the Polish economy, which has avoided the
contraction of its regional peers, to be among the first to
return to moderate growth, along with the Czech economy.
                                
 
--------------------------MARKET SNAPSHOT--------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2009 
Czech crown      <EURCZK=>   25.588   25.59  +0.01%    +4.55%
Polish zloty     <EURPLN=>    4.117    4.14  +0.56%    -0.05%
Hungarian forint <EURHUF=>  265.96   266.6   +0.24%    -0.91%
Croatian kuna    <EURHRK=>    7.334    7.352 +0.25%    +0.42%
Romanian leu     <EURRON=>    4.21     4.21   0%       -4.65%
Serbian dinar    <EURRSD=>   93.027   92.997 -0.03%    -3.81%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR    -4 basis points to  138bps over bmk*
4-yr T-bond   CZ4YT=RR    -4 basis points to  +176bps over bmk*
8-yr T-bond   CZ8YT=RR    -13 basis points to  +277bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR    -2 basis points to  +368bps over bmk*
5-yr T-bond   PL5YT=RR    -3 basis points to  +301bps over bmk*
10-yr T-bond PL10YT=RR    -9 basis points to  +275bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR   +9 basis points to  +699bps over bmk*
5-yr T-bond   HU5YT=RR   +7 basis points to  +622bps over bmk*
10-yr T-bond   HU10YT=RR  -4 basis points to  +533bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1138 CET.
Currency percent change calculated from the daily domestic 
close at 1500 GMT.
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 (Reporting by Reuters bureaus, writing by Jason Hovet, editing
by Stephen Nisbet)