* FX, stocks move on stronger ground
* Polish Q1 GDP shows growth
* Bonds mostly stable
(Updates with Polish GDP, bonds)
PRAGUE, May 29 (Reuters) - Hungary's forint led central
European currency gains against the euro on Friday on the back
of stronger stock markets, while the zloty extended gains after
Poland posted year-on-year growth in the first quarter.
Central European bourses, which have jumped more than 30
percent since March, opened 1 percent higher on Friday, tracking
gains in Asian and U.S. stocks after signs of improving economic
demand emerged in the United States and Japan. []
Poland posted first quarter economic growth of 0.8 percent
year-on-year, a touch below estimates, but in sharp contrast to
deep falls in neighbours like Hungary or the Czech Republic.
"The data confirms the economy is slowing, a trend already
visible in the fourth quarter," said Jaroslaw Janecki, chief
economist in Warsaw for Societe Generale.
Central European economies have been crushed by a fall in
western demand for their goods, although Poland is seen as
better placed with a stronger domestic market than neighbours
but growth is still slowing sharply compared to previous years.
The zloty <EURPLN=> was up 1.2 percent by 0848 GMT, bid at
4.471 to the euro, and longer-dated bond yields fell slightly.
Hungary's forint <EURHUF=> was 1.6 percent stronger than
Thursday's domestic close at 281.82. The Czech crown <EURCZK=>
and Romanian leu <EURRON=> both edged up 0.3 percent.
BANK PRESSURE
The zloty has shown some of the widest swings of any central
European currencies this year, nearing its all-time low in
February before shooting up as much as 17 percent to 4.225 per
euro by mid-April.
Dealers said on Thursday the Polish government has been
trading directly with European Union funds on currency markets,
helping defend the zloty at around 4.5 to the euro.
[]
The sharp slowing of central Europe's once-booming economies
has pushed up joblessness in the region, straining government
budgets and threatening banks with rising bad loans.
Citigroup cut recommendations on several Polish banks on
Friday, saying it was difficult to find value after their recent
strong share price performance. []
Moody's ratings agency has also put Polish banks on review,
along with Czech banks which face a tougher economic outlook.
Early Czech industrial data for April out on Friday showed a
23.2 percent year-on-year fall, returning near a record pace of
decline seen early this year and adding to speculation the
central could cut interest rates. []
"It means (recession) is broad-based, because I would expect
some improvement in the automotive sector due to the scrap
subsidy abroad," said Jan Vejmelek, Komercni Banka's head of
economic and strategy research.
"But it seems the rest of the (industrial) sector is in
deeper recession than we had expected."
Czech bonds were stable on Friday along with Hungarian
papers.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.78 26.854 +0.28% -0.1%
Polish zloty <EURPLN=> 4.471 4.525 +1.21% -7.96%
Hungarian forint <EURHUF=> 281.82 286.32 +1.6% -6.48%
Croatian kuna <EURHRK=> 7.33 7.33 0% +0.48%
Romanian leu <EURRON=> 4.18 4.194 +0.33% -3.96%
Serbian dinar <EURRSD=> 94.67 94.477 -0.2% -5.48%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +9 basis points to +119bps over bmk*
4-yr T-bond CZ4YT=RR +8 basis points to +147bps over bmk*
8-yr T-bond CZ8YT=RR +20 basis points to +273bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +5 basis points to +851bps over bmk*
5-yr T-bond HU5YT=RR +7 basis points to +763bps over bmk*
10-yr T-bond HU10YT=RR +7 basis points to +649bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1050 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 David Stamp/Richard Hubbard)
