* Zloty leads FX correction
* Stocks buck trend, helped by risk appetite
* Hungary PMI improves with region
(Adds details, quotes, bond prices)
PRAGUE, June 2 (Reuters) - Central Europe's currencies fell
back on Tuesday after strong gains in the previous session,
although some falls were tempered by signs of an improving
global economy that are supporting risk appetite.
Emerging European stocks extended gains by up to 1.5
percent, while Hungarian <> markets re-opened after a Monday
holiday to outperform with a 4 percent rise.
The Polish zloty <EURPLN=>, which has led a regional rebound
from March lows and jumped around 1.5 percent on Monday, slipped
1 percent to 4.484 per euro by 0929 GMT.
The Czech crown <EURCZK=> dipped 0.3 percent to bid at 26.74
to the euro. Hungary's forint <EURHUF=> fell 1 percent, giving
up Monday gains, while Romania's leu <EURRON=> edged 0.3 percent
down to 4.188 per euro.
"There are some corrections," said a central European
currency dealer in Stockholm. "We saw sharp gains yesterday, so
there is always some pullback unless we get some more positive
news to gather momentum."
The dealer also said worries about spillover from the
Baltics, where some concerns are building over the risk of
devaluation, could be weighing on sentiment in central Europe.
A months-long risk rally has helped currencies rebound as
much as 10 percent from mid-February, led by the zloty.
Strategists have said currencies still have room to gain in
the rally, although weakening was likely in the coming months
because economic fundamentals -- such as rising joblessness and
lower manufacturing output -- have not kept pace with the rise.
LOSING OUT
Investor flows have also not kept up with gains, with fund
tracker EPFR data showing outflows from emerging Europe equity
funds year-to-date as money shifts towards emerging market peers
with stronger fundamental stories. []
Central Europe's export-driven economies have been punished
by falling western demand, which has widened budget deficits and
increased borrowing.
The Czech finance ministry surprised slightly on Monday with
plans for two auctions in the slow summer months of July and
August. Czech bond yields ticked up on Tuesday, mainly on
shorter-dated issues.
Analysts say central European economic recovery is
impossible without a rebound in euro zone consumption.
Some glimmers of hope have appeared in better global
manufacturing data, and a survey on Tuesday showed a global
consumer confidence tracker is stabilising after falling for 18
months. []
Purchasing managers' indices in Poland, Czech Republic and
Hungary have all improved, but remain below the key 50 level
dividing contraction from expansion. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.77 26.687 -0.31% -0.06%
Polish zloty <EURPLN=> 4.484 4.442 -0.94% -8.23%
Hungarian forint <EURHUF=> 282.12 279.36 -0.98% -6.58%
Croatian kuna <EURHRK=> 7.344 7.347 +0.04% +0.29%
Romanian leu <EURRON=> 4.188 4.174 -0.33% -4.15%
Serbian dinar <EURRSD=> 93.64 94.096 +0.49% -4.44%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +10 basis points to 151bps over bmk*
4-yr T-bond CZ4YT=RR +7 basis points to +154bps over bmk*
8-yr T-bond CZ8YT=RR +14 basis points to +273bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +14 basis points to +854bps over bmk*
5-yr T-bond HU5YT=RR +13 basis points to +762bps over bmk*
10-yr T-bond HU10YT=RR +12 basis points to +650bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1132 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet; Editing
by Ruth Pitchford)
