* Forint trims gains, other FX down after stocks fall
* Further Fed, ECB moves key for region
* Region's outlook still positive, leu hit by politics
(Adds fixed income, detail)
By Dagmara Leszkowicz
WARSAW, Nov 17 (Reuters) - Hungary's forint trimmed morning gains on Tuesday while other currencies followed the region's and western European stocks into negative territory, but dealers said the outlook for the units remains positive.
The forint has benefited from investors' taking advantage of its high interest rate premium to other currencies. Romania's leu is stuck in ranges as the country struggles to form a new government, raising risks to its package of IMF support.
"The forint has outperformed other currencies in the region (in the past days)," said one Budapest-based dealer.
"The explanation may be simply that some big banks have come to the decision that it's worth buying the forint to exploit the (relatively high) carry."
Hungary's main interest rate stands at 7.0 percent and is seen moving lower next week, but it is still twice as high as in Poland, where the key rate is at an all-time low of 3.5 percent. But the Hungarian bank is expected to cut rates further, as long as there are no signs of further weakness for the forint, hit by one of Europe's harshest currency sell-offs last year.
Hungary's central bank deputy governor Ferenc Karvalits said on Monday a benign inflation outlook and improved risk assessment allowed the central bank to proceed with cautious interest rate cuts. [
]At 0957 GMT the forint <EURHUF=> was relatively stable at 265.66 against the euro.
Hungary's bonds firmed ahead of the government's T-bills auction, with dealers saying some investors are trying to get cheaper prices.
GDP KEY
The Polish zloty <EURPLN=> led losses on Tuesday, in what dealers said looked like consolidation in recent days' trade. They said the outlook for the currency is still positive -- most of the region's currencies have gained 3-4 percent in the last month.
"The direction for now is up, but it is evidently a consolidation of the recent gains," said one Warsaw-based dealer.
"I think GDP data (later this month) may be a factor that can push the unit to even below 4.0 to the euro."
At 1049 GMT, the zloty traded at 4.1056 against the euro.
Poland's statistics office releases third quarter GDP data on November 30 and the market widely expects growth of 1.3 percent year-on-year -- reaffirming the country's success in avoiding recession on the back of the financial crisis.
In the Czech Republic, Slovakia, Romania and Hungary, GDP data showed year-on-year contractions in the third quarter but also showed signs of recovery, with the Czech and Slovak economies growing on a quarterly basis.[
]In Romania, the leu <EURRON=> was range-bound, with dealers saying the currency showed little reaction to the central bank's decision on Monday to cut minimum reserve requirements on foreign currency-denominated liabilities to 25 percent from 30 percent previously. [
]The Czech crown <EURCZK=> was a touch down against the euro, but the Czech market was shut on Tuesday for a national holiday. --------------------------MARKET SNAPSHOT-------------------- Currency Latest Previous Local Local
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today in 2009 Czech crown <EURCZK=> 25.469 25.442 -0.11% +5.04% Polish zloty <EURPLN=> 4.094 4.087 -0.17% +0.51% Hungarian forint <EURHUF=> 265.66 265.68 +0.01% -0.79% Croatian kuna <EURHRK=> 7.313 7.304 -0.12% +0.71% Romanian leu <EURRON=> 4.289 4.29 +0.02% -6.4% Serbian dinar <EURRSD=> 94.31 94.21 -0.11% -5.12% Yield Spreads Czech treasury bonds <0#CZBMK=> 3-yr T-bond CZ3YT=RR +13 basis points to 112bps over bmk* 7-yr T-bond CZ7YT=RR -2 basis points to +110bps over bmk* 10-yr T-bond CZ10YT=RR -2 basis points to +89bps over bmk* Polish treasury bonds <0#PLBMK=> 2-yr T-bond PL2YT=RR -2 basis points to +369bps over bmk* 5-yr T-bond PL5YT=RR -1 basis points to +320bps over bmk* 10-yr T-bond PL10YT=RR -2 basis points to +279bps over bmk* Hungarian treasury bonds <0#HUBMK=> 3-yr T-bond HU3YT=RR -2 basis points to +521bps over bmk* 5-yr T-bond HU5YT=RR -1 basis points to +450bps over bmk* 10-yr T-bond HU10YT=RR -2 basis points to +396bps over bmk* *Benchmark is German bond equivalent. All data taken from Reuters at 0957 CET. Currency percent change calculated from the daily domestic close at 1600 GMT.
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