Wires

CORRECTED-CEE MARKETS-FX gets boost from euro zone PMI, leu recovers from lows

lows@ (Corrects 3rd paragraph to say leu 'traded near an all-time low' not 'touched an all-time low') PRAGUE, Nov 22 (Reuters) - Central Europe's currencies mostly edged higher on Friday, boosted by euro zone manufacturing data and renewed efforts in the U.S.-China trade dispute, although Hungary's forint underperformed and remained near record lows. In Romania, the leu firmed going into the second round of a presidential election in which incumbent Klaus Iohannis is expected to beat Social Democrat Party leader Viorica Dancila, whose government was toppled in October. The gains were a rare reprieve for the currency which has gradually dropped during the second half of the year to trade near an all-time low this week as investors remain wary over what many fear is a swelling budget deficit. Finance Minister Florin Citu said earlier this month the deficit could overshoot 4% of economic output this year without additional measures, leaving the new government little time to work up a remedy. Commerzbank said the vote, even if Dancila lost, showed the Social Democrats could still make life difficult for the new minority government leading the country to elections next year. "This is not a particularly good prospect for the leu, as it is under depreciation pressure anyway due to the current account and budget deficit," Commerzbank analyst Alexandra Bechtel said. Ionut Dumitru, chief economist at Raiffeisen Bank Romania, also said markets were waiting to see what budget measures the government would take. "At a deficit of over 4% of GDP this year markets could become fairly anxious," he said. "A signal from the government that it is aware of the situation and is taking measures to correct it is needed." The leu had gained 0.1% to 4.772 to the euro by 1037 GMT, off a record low of 4.7835. The currency is the second-worst performer in the region in 2019, losing 2.5% since the start of the year. The forint has lost almost 4% and is also drifting just off record lows hit in late September as loose monetary policy at home and weak global sentiment caused by trade wars and Britain's uncertain EU exit weigh on it. On Friday, it ticked up less than 0.1% to 334.20 per euro, failing to benefit from better sentiment after China renewed efforts to work out a trade pact with the United States.

Better-than-expected manufacturing PMI data in the euro zone - the key trade partner for central Europe's export-dominant economies - also lifted the mood. Stock markets rose, led by Warsaw and Prague's 0.6% advance. The Polish zloty and Czech crown also rose 0.1%. "The market is feeling the situation in European manufacturing is bottoming out," ING's chief economist in Prague, Jakub Seidler, said. "Everything will be dependent on foreign developments. If there is a trade deal, the situation would improve. But it is too premature, we are not yet there."

CEE MARKETS SNAPSHOT AT

1137 CET CURRENCIES

Latest Previous Daily Changebid close change in 2019EURCZK= Czech crown 25.5150 25.5360+0.08% +0.75%EURHUF= Hungary forint 334.2000 334.4150+0.06% -3.92%EURPLN= Polish zloty 4.2951 4.3000+0.11% -0.13%EURRON= Romanian leu 4.7720 4.7784+0.13% -2.47%EURHRK= Croatian kuna 7.4380 7.4373-0.01% -0.38%EURRSD= Serbian dinar 117.5200 117.5800+0.05% +0.66%Note: daily change calculated from 1800 CETLatest Previous Daily Changeclose change in 2019.PX Prague 1080.11 1073.6900+0.60% +9.48%.BUX Budapest 43713.89 43654.37+0.14% +11.69%.WIG20 Warsaw 2192.90 2179.53+0.61% -3.68%.BETI Bucharest 9719.62 9713.16+0.07% +31.64%.SBITOP Ljubljana 898.97 893.52+0.61% +11.78%.CRBEX Zagreb 1999.67 2000.63-0.05% +14.34%.BELEX15 Belgrade 762.78 763.55-0.10% +0.14%.SOFIX Sofia 550.43 550.00+0.08% -7.41%

BONDS

Yield Yield Spread Daily(bid) change vs Bund change in

Czech Republic spread

CZ2YT=RR 2-year 1.4060 0.0230+203bps +3bpsCZ5YT=RR 5-year 1.2650 0.0570+186bps +8bpsCZ10YT=RR 10-year 1.4820 -0.0190+183bps +1bps

Poland

PL2YT=RR 2-year 1.4070 0.0120+203bps +2bpsPL5YT=RR 5-year 1.7840 -0.0310+238bps -1bpsPL10YT=RR 10-year 2.0670 -0.0080+242bps +2bpsFORWARD RATE AGREEMENT3x6 6x9 9x12 3M interbankCzech Rep 2.25 2.25 2.18

2.18

Hungary 0.22 0.26 0.30

0.18

Poland 1.74 1.70 1.67

1.71

Note: FRA quotes are for ask prices*************************************************************

(Reporting by Jason Hovet in Prague and Luiza Ilie in Bucharest; Editing by Kirsten Donovan)