* Risk appetite lifts FX, outweighing poor data
* Czech industry falls more, Hungary c/a gap shrinks
* Polish bonds steady after previous gains
(Adds details, bonds, updates prices)
By Jason Hovet
PRAGUE, June 30 (Reuters) - The Hungarian forint rose on
Tuesday after much better than expected balance of payments data
and the Czech crown joined it near its highest levels this year
despite data showing the economic crunch had not abated there.
Dealers said an improved investor sentiment in the euro zone
had boosted risk appetite, driving more orders for assets in a
region that has struggled to shake off the global downturn.
The forint <EURHUF=> jumped 1.3 percent to bid at 272.6 per
euro by 0953 GMT, its strongest since Jan. 8. The Czech crown
<EURCZK=> hit its strongest since December, rising 0.6 percent
to 25.852 to the euro.
Central European stocks, also boosted by market hopes that
Turkey was nearing a credit deal with the International Monetary
Fund, jumped around 1 percent. []
"We are led by general risk appetite, with the dollar weak
and equity markets higher," a Stockholm-based central European
currency dealer said.
The Polish zloty <EURPLN=> followed with a 1 percent gain,
while bonds, after gaining in the previous two session on
smaller supply concerns, held steady before a Wednesday auction.
In Romania, where markets expected a 50 basis point rate cut
from the central bank later in the day, the leu <EURRON=> edged
up a bit and dealers said the expected move had been priced in.
Hungarian imports dropped sharply in the first quarter to
cut the country's current account deficit well below analysts'
estimates. Falling orders in the Czech Republic pushed industry
into a more than 20 percent drop. [] []
DIVIDE
Central Europe's export-dependent economies have been among
the hardest hit in the global downturn due to a collapse in
orders for the cars and electronics the region produces for euro
zone, and analysts say a rebound in German consumption, in
particular, is crucial to a recovery.
Strategists say an emerging Europe rally that has boosted
currencies, led by the crown, by as much as 14 percent and
equity markets, led by Budapest and Warsaw, by more than 40
percent higher since mid-February is losing steam.
Capital Economics, in a late report on Monday, said the
rally went largely beyond fundamentals and risk appetite was set
to wane as the pace of global economic recovery disappoints.
"A series of local factors continue to loom large over
financial markets in the region," the report said, mentioning
banking fragility and possible currency devaluation in Latvia,
whose spillover effects had unnerved markets earlier in June.
"All of these factors suggest that further falls in
financial markets are likely over the coming months."
The Czech May output data appeared to underpin that view.
Analysts said it signalled a divide between indicators such
as output and the purchasing managers' index (PMI), which has
shown an uptick in firms' economic outlooks in the last four
months.
"It seems optimism from PMI indices is not based on real
figures," said Jan Vejmelek, Komercni Banka's head of economic
and strategy research.
"The poor situation in Czech industry continues."
The Czechs, Poles and Hungarians will release June PMI data
on Wednesday.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.852 25.994 +0.55% +3.49%
Polish zloty <EURPLN=> 4.457 4.501 +0.99% -7.67%
Hungarian forint <EURHUF=> 272.6 276.08 +1.28% -3.32%
Croatian kuna <EURHRK=> 7.263 7.275 +0.17% +1.4%
Romanian leu <EURRON=> 4.201 4.208 +0.17% -4.44%
Serbian dinar <EURRSD=> 93.44 94.07 +0.67% -4.24%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -3 basis points to 149bps over bmk*
4-yr T-bond CZ4YT=RR +12 basis points to +169bps over bmk*
8-yr T-bond CZ8YT=RR +10 basis points to +296bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -1 basis points to +381bps over bmk*
5-yr T-bond PL5YT=RR -4 basis points to +326bps over bmk*
10-yr T-bond PL10YT=RR -4 basis points to +290bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1155 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet; Editing
by Ruth Pitchford/Victoria Main)
