* PMI, easing Dubai fears lift CEE, stocks
* Bond yields dip, with auctions, supply due
(Recasts with fresh prices, comments)
PRAGUE/BUDAPEST, Dec 1 (Reuters) - Central European
currencies bounced off overnight lows on Tuesday, led by
Poland's zloty<EURPLN=> as manufacturing output in the region
and its Western European markets improved.
A retreat of the dollar against the region's main reference
currency, the euro<EUR=>, signalled increased risk appetite, and
Central European stock markets also firmed, mirroring gains in
other emerging markets<.MSCIEF>.
"The zloty was the main market mover in the region," one
Budapest-based currency dealer said. "There has been news about
Poland's economic growth which is striking relative to
(recession) in the other countries in the region and Europe."
Emerging markets took a hammering when concerns over Dubai
rose last week, although central Europe has been buoyed this
week by stronger economic data that points to recovery.
The zloty gained 1.2 percent versus the euro by 1523 GMT,
Hungary's forint<EURHUF=> strengthened one percent, while the
Czech crown<EURCZK=> firmed 0.6 percent.
Purchasing Manager Index data on Tuesday showed growth in
the Polish and the Czech manufacturing sectors in November for
the first time in more than a year, while Hungary's index
compiled with a different methodology, slipped.[]
Figures from the euro zone, the main export market of
Central Europe's recession-hit economies, showed growth for the
second straight month.[]
Poland, which has a strong internal market, has been the
only European Union member which has escaped recession, and a
Polish central banker said the economy could expand by 1.5-2.0
percent in the fourth quarter of 2010.[]
Hungary's parliament has approved the 2010 budget late on
Monday, targetting lower deficit than elsewhere in the region.
Dealers saw risks of a deficit overshoot as Hungary will
hold general elections next year, but they said investors were
likely to focus on global risk taking patterns rather than
domestic news in the rest of the year.
Low end-year market liquidity and concerns over rising
budget deficits are expected to continue to cause some swings in
the rest of the year in the region's markets, while the forint's
movements are moderated by technical factors, dealers said.
"It has been pushed back several times (in the past weeks)
from levels weaker than 275, and it has been also unwilling to
stay firmer than 272," one dealer said.
Romanian markets were closed for holiday, and the
leu<EURRON=> firmed in illiquid international trade by 0.4
percent to a two-month high.
LOOKING TO NEXT YEAR
Czech industrial output also fell in October at its slowest
pace in a year, data showed on Monday, adding to the positive
message from the purchasing managers' survey.
"For the first time since the crisis started we are above
the 50 point level, which is supporting optimism about the
future of the Czech economy," said Patria Finance chief
economist David Marek.
Czech bond yields dipped mostly on Tuesday, getting support
also from central banker Vladimir Tomsik reiterating there was
still room to lower interest rates in the country -- though
markets have mostly priced this out. []
The Czechs hold their final bond auction of the year on
Wednesday, while markets will watch for Thursday news on the
debt issuance plans for the first quarter.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.967 26.118 +0.58% +3.03%
Polish zloty <EURPLN=> 4.118 4.166 +1.17% -0.07%
Hungarian forint <EURHUF=> 272.25 274.97 +1% -3.2%
Croatian kuna <EURHRK=> 7.301 7.31 +0.12% +0.88%
Romanian leu <EURRON=> 4.25 4.266 +0.38% -5.54%
Serbian dinar <EURRSD=> 95.12 94.9 -0.23% -5.93%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +22 basis points to 114bps over bmk*
7-yr T-bond CZ7YT=RR -3 basis points to +108bps over bmk*
10-yr T-bond CZ10YT=RR 0 basis points to +97bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +3 basis points to +363bps over bmk*
5-yr T-bond PL5YT=RR +3 basis points to +344bps over bmk*
10-yr T-bond PL10YT=RR -1 basis points to +301bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +2 basis points to +536bps over bmk*
5-yr T-bond HU5YT=RR +3 basis points to +496bps over bmk*
10-yr T-bond HU10YT=RR -1 basis points to +434bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1623 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
For related news and prices, click on the codes in brackets:
All emerging market news []
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 [] Economic Data Guide <ECONGUIDE>
Official rates [] Emerging Diary []
Top events [] Diaries [] Diaries Index []
(Reporting by Reuters bureaus, writing by Jason Hovet/Sandor
Peto, editing by Patrick Graham and Victoria Main)
((prague.newsroom@thomsonreuters.com; Reuters Messaging:
jason.hovet.reuters.com@reuters.net; +420-224 190 476))
