* Crown up, other FX fall as Greek crisis boosts cross-trade
* CPI in Romania, Hungary leave room for more rate easing
* Polish longer-dated bonds ease ahead of Wed auction
(Updates throughout)
By Dagmara Leszkowicz and Marius Zaharia
WARSAW/BUCHAREST, May 11 (Reuters) - The Czech crown
outperformed central European peers on Tuesday as investors
looked mostly for intra-region trades after volumes fell due to
large Greece-related swings in global sentiment.
After hefty gains in a relief rally on Monday, triggered by
a huge aid package addressing the euro zone debt crisis
[], focus shifted back to concerns over whether
Greece and other states can deliver drastic debt cuts.
Dominating uncertainty caused a drop in volumes on Tuesday,
with investors refraining from taking new positions, which
exacerbated moves in currencies against the euro and boosted
intra-region trading.
This led to gains for the crown, because Czech assets are
often regarded as a safer bet due to better economic
fundamentals.
"There is a slight turn to more intra-region trading, not
many people want to stay long euro," a Prague dealer said,
adding many are stepping back from the market at the moment.
"The crown ... becomes sometimes a safer haven for
investors. A lot of people are squaring positions in the
region."
At 1354 GMT, the crown <EURCZK=> traded 0.4 percent stronger
on the day, while the Polish zloty <EURPLN=> and the Romanian
leu <EURRON=> were 0.1-0.2 percent weaker and the Hungarian
forint <EURHUF=> was down 0.6 percent.
Czech bonds were little moved on Tuesday, while the Polish
longer-dated papers were slightly weaker ahead of Wednesday's
bonds tender, where the finance ministry will offer 1.5-3.0
billion zlotys in 5-year paper maturing in 2015.
Hungarian yields fell slightly in choppy trade.
EYEING GDP DATA
Hungarian and Romanian inflation data for April came close
to market expectations and left some room for both central banks
to cut interest rates further from the current record lows.
[] []
The two countries, as well as Czech Republic and Slovakia,
expect first-quarter gross domestic product data on Tuesday at
0700 GMT and investors will be looking at the pace of economic
recovery to get more clues on future rate moves.
The Czech and Slovak economies are seen growing further in
the first quarter driven by foreign demand, which was unaffected
by the Greek crisis, which may stir another bout of weakness in
euro zone economic activity if it leads to fiscal tightening.
Hungary is seen coming out of recession, also helped by
industry and exports, while the consumption-based Romanian
economy is seen shrinking further as domestic demand remains
muted. [] [] []
Consumers in aid-recipient Romania may suffer another blow,
as the International Monetary Fund increased pressure on the
government to cut spending by saying it will disburse the next
tranche of its loan only after the country slashes wages and
pensions. []
Foreign investors in emerging Europe became more cautious in
their outlook for the region and the upwards trend in business
morale slowed down for the second quarter, a Thomson Reuters
&OeKB survey showed. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.514 25.61 +0.38% +3.15%
Polish zloty <EURPLN=> 4.005 4.002 -0.07% +2.47%
Hungarian forint <EURHUF=> 274.25 272.52 -0.63% -1.42%
Croatian kuna <EURHRK=> 7.259 7.264 +0.07% +0.69%
Romanian leu <EURRON=> 4.176 4.166 -0.24% +1.47%
Serbian dinar <EURRSD=> 99.8 99.83 +0.03% -3.93%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +4 basis points to 98bps over bmk*
7-yr T-bond CZ7YT=RR +7 basis points to +101bps over bmk*
10-yr T-bond CZ9YT=RR +2 basis points to +93bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -2 basis points to +402bps over bmk*
5-yr T-bond PL5YT=RR +6 basis points to +346bps over bmk*
10-yr T-bond PL10YT=RR +4 basis points to +270bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -5 basis points to +547bps over bmk*
5-yr T-bond HU5YT=RR -6 basis points to +481bps over bmk*
10-yr T-bond HU10YT=RR +1 basis points to +497bps 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 Reuters bureaus, Writing by Dagmara Leszkowicz
and Marius Zaharia; editing by Jason Webb)
