* FX bounces back, US labour market data supports mkts
* Trade seen remaining volatile
* Hungarian bond yields at 3-month lows
(Updates throughout)
By Marton Dunai and Dagmara Leszkowicz
BUDAPEST/WARSAW, May 7 (Reuters) - The Polish zloty trimmed
some early losses late on Friday, while Hungary's forint and the
Czech crown gained, finding support after encouraging U.S. jobs
data and German approval of a Greek aid package.
Bullish economic data from the Czech Republic also supported
the crown.
Sentiment across central Europe overall was depressed as
European shares and the euro fell after a sell-off on Wall
Street on Thursday exacerbated worries about a euro zone debt
crisis. A conference call between G7 finance ministers to
discuss the Greek situation further unnerved investors.
[]
However, there was some relief as U.S. data showed
employment grew at the fastest pace in four years last month and
German lawmakers backed a bill to provide billions of euros in
aid for debt-stricken Greece.
"This is nothing but a risk aversion regime, that sets
trends globally," said Marcin Mazurek, analyst at BRE bank in
Warsaw.
"Right now we're supported by US data and German approval
(of the aid package) but I expect the FX market to remain
volatile."
By 1415 GMT the zloty was 0.1 percent lower, but recovered
some of its previous losses after briefly touching
six-month-lows overnight.
The Romanian leu <EURRON=> was almost flat against the euro,
while the Hungarian forint <EUHUF=> and the Czech crown
<EURRON=> rose 0.5 percent and 1.5 percent, respectively.
A Reuters poll showed the region's currencies may regain
some ground later this month and are seen posting strong gains
in the next 12 months. []
The crown is the only currency in CEE3 -- comprising the
zloty, forint and crown, the region's most liquid currencies --
to have recorded gains this year as the zloty and the forint
moved into negative territory this week.
The Czech economy showed signs of resilience as a host of
indicators published on Friday, including retail sales and
industrial output, beat market expectations. Exports and imports
were both sharply higher. []
"The recovery in growth of retail sales signal a positive
turnaround in household consumption," said ING senior economist
Vojtech Benda. "The GDP growth is thus standing on two legs."
Still, even Czech assets could come under pressure as Greece
and the euro zone continue to weigh.
"There is global uncertainty, and we see many investors
withdrawing from emerging markets," a Prague dealer said.
Stocks market were all in the red on Friday with Budapest's
BUX <> leading losses, down almost 6 percent.
BONDS
Hungarian bond yields retreated by 5-10 basis points from
morning highs, but were still well above Thursday's levels and
up 90-150 basis points over the week, with yields hovering
around three-month highs.
"The (price) rebound was timely as yields have risen a lot,"
one Budapest-based trader said. The forint has rebounded, and
what is also important, the euro also rebounded against the
dollar."
"(But) markets have not been strongly impressed by the
German parliament decision to approve the Greek bailout ...
Markets will remain nervous next week."
Polish bonds recovered slightly, tracking the zloty and
dealers said the longer-end of the curve is likely to be more
sensitive to global sentiment.
"The shorter-end is overliquid, so I think it may perform
better than other papers," said one Warsaw-based dealer.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.84 26.22 +1.47% +1.85%
Polish zloty <EURPLN=> 4.151 4.145 -0.14% -1.13%
Hungarian forint <EURHUF=> 280.4 281.73 +0.47% -3.58%
Croatian kuna <EURHRK=> 7.262 7.259 -0.04% +0.65%
Romanian leu <EURRON=> 4.192 4.191 -0.02% +1.08%
Serbian dinar <EURRSD=> 100.034 99.58 -0.45% -4.15%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -2 basis points to 112bps over bmk*
7-yr T-bond CZ7YT=RR +6 basis points to +126bps over bmk*
10-yr T-bond CZ9YT=RR +11 basis points to +121bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +25 basis points to +627bps over bmk*
5-yr T-bond HU5YT=RR +14 basis points to +568bps over bmk*
10-yr T-bond HU10YT=RR +16 basis points to +478bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1615 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Marton Dunai and
Dagmara Leszkowicz; Editing by Susan Fenton)
