* FX lower on weaker economic outlook, N.Korea
* But U.S. confidence gauge gives boost to markets
* ECB's June projections to be more negative -Nowotny
* Polish retail sales, jobless data better than f'cast
(Updates prices after U.S. data)
By Dagmara Leszkowicz and Gergely Szakacs
WARSAW/BUDAPEST, May 26 (Reuters) - Hungary's forint led
losses in central Europe on Tuesday as events in Asia and the
euro zone undermined any prospects of a fast recovery from the
economic crisis.
Currencies have swung sharply along with risk sentiment in
recent months, and the forint dropped as much as 1 percent on
the day before paring losses in the late afternoon when global
markets got a boost from a much higher than expected U.S.
economic confidence reading.
Stocks also recovered some losses but stayed on weaker
footing, showing the more downbeat tone for global risk appetite
and emerging markets after North Korea said it had fired new
missiles, adding to tensions at a time when markets are
questioning recent optimism. []
At 1507 GMT, Hungary's forint <EURHUF=> was 0.6 percent
weaker against the euro to bid at 281.44.
"The region's currencies are moving together, the earlier
bullish sentiment is over," a currency dealer said. "The economy
(of Hungary) and the European Union is not in good shape. A
quick recovery can be ruled out."
Central Europe's export-driven economies have suffered from
a fall in demand from western European markets, most notably
Germany, where the statistics office released final GDP figures
showing the economy contracted by 6.7 percent on the year in the
first quarter. []
European Central Bank Governing Council member Ewald Nowotny
said on Tuesday the ECB's June staff projections would be more
negative than those earlier in the year [], while
Russia warned of a deeper downturn than its 1998 crisis.
[]
Emerging European bourses were also down, but Warsaw erased
a 1 percent fall after the U.S. Conference Board's consumer
confidence gauge rose to 54.9 in May, more than 10 points higher
than analysts' forecasts. [] []
DOMESTIC FACTORS
Analysts have noted an economic recovery in eastern Europe
would not be quick, but that a pick up in U.S. and European
consumption could bring a sustainable rebound.
Poland releases official GDP figures for the first quarter
on May 29. Analysts polled by Reuters expect the economy to
expand by just 1 percent -- far below the rates of recent years,
but besting sharp drops elsewhere in the region.
The country's statistics office said on Tuesday April retail
sales rose 1 percent, up from an 0.8 percent fall in March,
while the unemployment rate fell to 11.0 percent. []
"The data is slightly better than expected and is still
suggesting that perhaps Poland is proving more resilient than
the rest of the region," said Timothy Ash, head of Emerging
European Research at RBS.
Despite the data, the zloty <EURPLN=> was down 0.2 percent
to the euro, while the crown <EURCZK=> dropped 0.1 percent,
weighed down additionally by the country's budget worries.
In Romania the leu <EURRON=> was also slightly down, trading
at 4.175 against the single currency.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.681 26.66 -0.08% +0.27%
Polish zloty <EURPLN=> 4.414 4.407 -0.16% -6.77%
Hungarian forint <EURHUF=> 281.44 279.83 -0.57% -6.36%
Croatian kuna <EURHRK=> 7.287 7.301 +0.19% +1.07%
Romanian leu <EURRON=> 4.175 4.167 -0.19% -3.85%
Serbian dinar <EURRSD=> 94.377 94.273 -0.11% -5.19%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -2 basis points to 149bps over bmk*
4-yr T-bond CZ4YT=RR -14 basis points to +162bps over bmk*
8-yr T-bond CZ8YT=RR +11 basis points to +266bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +10 basis points to +832bps over bmk*
5-yr T-bond HU5YT=RR -8 basis points to +743bps over bmk*
10-yr T-bond HU10YT=RR +6 basis points to +633bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1708 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 Dagmara Leszkowicz;
editing by Stephen Nisbet and Andy Bruce)
