* FX up in quiet trade, stocks rise 1-2 pct
* Dealers say moves a correction, still see pressure
* Hungary's yields drop, stay well-off April lows
(Updates throughout)
By Jason Hovet and Dagmara Leszkowicz
PRAGUE/WARSAW, May 18 (Reuters) - Central Europe's
currencies rose and bond yields eased on Tuesday but dealers
said regional assets may still come under pressure due to the
euro zone's debt crisis and trade was likely to remain volatile.
Currencies have been affected by the weakness of the euro,
the region's main reference unit, which fell to a four-year low
against the dollar on Monday over concerns that fiscal measures
could hurt growth in the 16-nation zone.
"Consolidation in the core market supported CEE currencies,"
said one Warsaw-based dealer. "But concerns over the euro zone
persist."
The euro staged a modest rebound against the dollar on
Tuesday, pushing emerging Europe's currencies higher.
Hungary's forint <EUHUF=> led gains, rising 0.8 percent. The
Polish zloty <EURCZK=> and the Czech crown <EURCZK=> each gained
0.5 percent versus the common currency, while Romania's leu
<EURRON=> was little changed.
Stocks in the region were also in positive territory, rising
some 0.5-2.0 percent.
In Hungary, bond yields dropped around 10-20 basis points on
Tuesday, continuing their rollercoaster trade from the past
month but are still 70-95 basis points above April lows.
"The euro/dollar moves everything now, we can forget any
other factors like today's wage figures," one Budapest-based
fixed income trader said.
Hungary's gross average wages rose by 9.4 percent in annual
terms in March after a 0.8 percent rise in February, mainly due
to a public sector bonus payout. Analysts said the data was not
enough to influence monetary policy, which most think still has
room to ease further. []
Polish bonds also edged higher ahead of a Wednesday tender
and dealers said investors were preparing their portfolios to
buy government-backed bonds.
Poland's state-owned bank BGK will offer 1.5-3.0 billion
zlotys in state-backed road bonds due in 2018. The cash raised
from the sale will be used to finance infrastructure projects
carried out by a special government agency.
FOREIGN DIRECT INVESTMENT
Emerging Europe assets mostly fell on Monday on concerns a
750 billion euro rescue package for indebted euro zone countries
could hurt the region's nascent economic recovery.
The European Union's eastern economies -- despite higher
growth potential and lower debt piles than the west -- are seen
as particularly vulnerable because of heavy dependence on demand
from western Europe for their exports.
The Austrian central bank said on Tuesday the country's
direct investments and loans to borrowers in emerging European
countries plummeted in 2009 as the global financial crisis hit
the region where Austrian banks are major lenders.
[]
The fall in foreign direct investment (FDI) is particularly
seen in the European Union's poorest emerging economies, where
in Bulgaria it plunged to minus 21.9 million euros and in
Romania it fell to 754 million euros by the end of March.
[]
By contrast, Polish FDI inflows reached 3.5 billion euros in
the first quarter, data showed on Monday, and analysts said this
boded well for overall financing of the country's current
account deficit.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.412 25.539 +0.5% +3.57%
Polish zloty <EURPLN=> 4.001 4.021 +0.5% +2.57%
Hungarian forint <EURHUF=> 276.62 278.75 +0.77% -2.27%
Croatian kuna <EURHRK=> 7.253 7.253 0% +0.77%
Romanian leu <EURRON=> 4.193 4.194 +0.02% +1.06%
Serbian dinar <EURRSD=> 101.3 100.61 -0.68% -5.35%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR 0 basis points to 109bps over bmk*
7-yr T-bond CZ7YT=RR +14 basis points to +114bps over bmk*
10-yr T-bond CZ9YT=RR +3 basis points to +101bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -1 basis points to +393bps over bmk*
5-yr T-bond PL5YT=RR +4 basis points to +350bps over bmk*
10-yr T-bond PL10YT=RR +4 basis points to +282bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -33 basis points to +541bps over bmk*
5-yr T-bond HU5YT=RR -10 basis points to +500bps over bmk*
10-yr T-bond HU10YT=RR -11 basis points to +420bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1636 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 Stephen Nisbet)
