* CEE FX retreats, but seen holding onto recent gains
* CPI, GDP data to be in focus this week
(Updates throughout)
By Krisztina Than and Jason Hovet
BUDAPEST/PRAGUE, May 11 (Reuters) - Central European
currencies inched lower on Monday, continuing a retreat from
highs over the past month but still buoyed by a global risk
rally that is showing faint signs of cooling.
Romania's leu, which had hit a three-week high last week,
led losses with a 0.4 percent fall in the region, hit by
profit-taking when a shrinking trade gap gave more evidence the
Balkan economy lost ground in the first quarter. []
Central Europe's export-heavy economies are battling through
the worst global downturn in decades, with slipping demand
hurting the region's car plants, parts suppliers and electronic
producers.
An economic fall into or near recession has also hit
government coffers through lower revenues and higher spending,
dampening countries' plans to adopt the euro currency in coming
years.
Czech officials warned on Monday the public finance gap
would overshoot EU-dictated limits this year and next, although
Polish pledges that it could slash its deficit from similar
levels drew scepticism from economists. []
The crown fell 0.35 percent to 26.773 to the euro by 1453
GMT, and the Polish zloty gave up 0.4 percent.
Hungary's forint, the region's top performer over the past
two weeks with a 5.8 percent rise, dipped 0.3 percent to 278.98
per euro.
But dealers and strategists said space remained for more
gains in the coming gains as global sentiments stays elevated.
"We are now seeing weaker pressure on currencies," Societe
Generale emerging strategist Murat Toprak said. "The question
today is if we are now in a corrective phase? Today looked like
profit-taking more than anything else."
PRESSURE TO BUILD
Central European currencies have stayed on a stronger
footing since mid-February, when the forint hit an all-time low
and the zloty neared its record low, owing to a rebound in risk
appetite on the back of pledges to make IMF funds available and
signs of improvement in the global economy.
Stock exchanges in Warsaw and Budapest are up 37 percent
since Feb. 17, while Prague has gained 48 percent.
The crown, forint and zloty are up more than 10 percent in
the that time, but analysts and strategists have grown cautious
on the risk rally due to concerns the economic slowdown will
start hurting banks and taking more people's jobs.
"The recovery in risk appetite is starting to look pretty
stretched by now, especially given the fact that the global
economy is still contracting (even if at a slower pace) and that
we still expect real sector corporate defaults to intensify from
here," Dresdner Kleinwort analysts wrote on Monday.
Hungary's financial watchdog warned on Monday that continued
deterioration in banks' lending books was a key risk for the
country's financial system this year after the ratio of
non-performing loans rose to 3.3 percent in the first quarter
from 2.7 percent at the end of December. []
This week inflation and gross domestic product data across
the central eastern European region will be key for currencies,
as these two indicators strongly influence the rate outlook.
Data in Slovakia, which like the Czech Republic depends
heavily on car and other industrial exports, showed output fell
less than expected in March, although the figure still
represented a steep 18 percent slowdown over the previous year.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.764 26.678 -0.32% -0.04%
Polish zloty <EURPLN=> 4.385 4.367 -0.41% -6.16%
Hungarian forint <EURHUF=> 278.98 278.00 -0.35% -5.53%
Croatian kuna <EURHRK=> 7.355 7.356 +0.01% +0.14%
Romanian leu <EURRON=> 4.15 4.133 -0.41% -3.27%
Serbian dinar <EURRSD=> 94.465 94.465 0% -5.28%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -2 basis points to 158bps over bmk*
4-yr T-bond CZ4YT=RR -20 basis points to +182bps over bmk*
8-yr T-bond CZ8YT=RR +16 basis points to +280bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -4 basis points to +425bps over bmk*
5-yr T-bond PL5YT=RR +8 basis points to +341bps over bmk*
10-yr T-bond PL10YT=RR +15 basis points to +296bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +4 basis points to +857bps over bmk*
5-yr T-bond HU5YT=RR +4 basis points to +782bps over bmk*
10-yr T-bond HU10YT=RR -16 basis points to +651bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1654 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Krisztina Than and Jason Hovet; editing by Andy
Bruce)
