* FX rise on econ hopes
* PMI data shows signs of stabilisation
* Bonds steady, Czechs continue strong issuance
(Adds details, bonds)
By Jason Hovet
PRAGUE, May 4 (Reuters) - Signs central Europe's downturn
may be easing helped lifted the region's currencies on Monday on
the back of a rise for stock markets and hopes the global
economy is also recovering faster than expected.
The rate of decline in Czech manufacturing slowed in April,
but was still falling due to a drop in new orders, a Markit
Economics survey showed, while in the region's largest economy
Poland the index inched down a touch from a 5-month high.
[]
The data, while far from showing a recovery is near, was the
latest to show the region's export-dependent economies were
grasping for a bottom, and strategists said it could take some
pressure off currencies that have fallen sharply this year.
"This data should confirm some stabilisation in
forward-looking indicators," said Ulrich Leuchtmann, head of
foreign exchange research at Commerzbank in Frankfurt.
"Particularly for foreign exchange markets, there is light
at the end of the tunnel."
Poland's zloty <EURPLN=> and the Czech crown <EURCZK=> led
gains after a long holiday weekend, up 0.6 percent and 0.5
percent, respectively, from last Thursday. Markets were closed
on Friday for May Day holidays.
In Hungary, among the worst-hit in the downturn but where a
different survey showed an April rise in the purchasing
managers' index, the forint <EURHUF=> was up 0.2 percent at
287.62 versus the euro by midday.
Romania's leu <EURRON=> gained to 4.19 per euro, up 0.1
percent. Dealers expected though that trading would stay subdued
because of a market holiday in London.
IMPROVEMENT, FOR NOW
Risk appetite rose after reports on Friday showed U.S.
consumers were more confident over the economy. []
Central European stocks also gained, with bourses in Warsaw,
Prague and Budapest jumping up to 3 percent.
Central European currencies have bounced since mid-February,
with the zloty gaining 12 percent and crown up 10.5 percent. The
zloty neared a record low in mid-February, at one point losing a
third of its value against the euro from a record high in July.
Investor flows to the region have slowly returned since
February, aided by western pledges of funds to underpin regional
lending and financing. The Czechs have already sold almost 80
percent of planned domestic issuance this year and show no signs
of easing up. []
Domestic bonds in the region were steady on Monday.
Falling euro zone demand for central European goods like
cars and televisions has swung the region in or near recession
and the European Commission was the latest to forecast economic
contractions across the region this year. []
But industrial output declines have slowed, helped by car
scrapping subsidies and other moves to bolster western European
markets. Poland's March output surprised with a smaller than
expected 2 percent fall.
"The PMI level is still far from (showing) the drop has
stopped," Pavel Sobisek, chief economist for UniCredit in
Prague, said commenting on Czech data.
"It is a confirmation that the most dramatic decline is
behind us, and that it was in the first quarter."
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.669 26.79 +0.45% +0.31%
Polish zloty <EURPLN=> 4.392 4.418 +0.59% -6.31%
Hungarian forint <EURHUF=> 287.62 288.2 +0.2% -8.37%
Croatian kuna <EURHRK=> 7.407 7.415 +0.11% -0.57%
Romanian leu <EURRON=> 4.19 4.194 +0.1% -4.19%
Serbian dinar <EURRSD=> 94.525 94.637 +0.12% -5.34%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +3 basis points to 182bps over bmk*
4-yr T-bond CZ4YT=RR 0 basis points to +211bps over bmk*
8-yr T-bond CZ8YT=RR 0 basis points to +299bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +6 basis points to +417bps over bmk*
5-yr T-bond PL5YT=RR +2 basis points to +343bps over bmk*
10-yr T-bond PL10YT=RR -2 basis points to +300bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +9 basis points to +888bps over bmk*
5-yr T-bond HU5YT=RR +15 basis points to +828bps over bmk*
10-yr T-bond HU10YT=RR +2 basis points to +730bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1105 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 Patrick Graham)
