BUDAPEST: Central European stocks and currencies eased and some government bonds firmed on Monday after a failure of oil producers to agree a cut in supply sent crude prices lower.
The region's fast-growing and stable emerging economies do not rely on crude or commodities revenues, but lower crude prices can keep inflation anaemic and push the region's central banks towards looser monetary policy.
Czech figures released on Monday showed a 4.5 percent annual decline in industrial producer prices.
The fall was only slightly bigger than expected but all inflation figures released in the region in the past months have tended to indicate weaker than expected price dynamics.
The zloty and the leu eased 0.1 percent against the euro by 0837 GMT.
The forint quickly recovered from an initial fall. Trading at 310.5 versus the euro is near its strongest levels in one month even though the Hungarian central bank resumed its rate cutting cycle in March.
Hungarian stocks were also relatively resilient.
A 1.1 percent fall in the shares of oil group MOL pushed the Budapest Stock Exchange's main index down by 0.4 percent, but it outperformed Warsaw and Prague and stays near its highest levels since 2007.
"The Hungarian government's attitude (to foreign investors) has changed, they will cut the bank tax further ... and Fitch may upgrade Hungary's debt rating on May 20," said Monika Kiss, analyst of Equilor Brokerage in Budapest.
"Comparatively, investors looking at the news flow from Warsaw, probably will not want to buy assets there," she said.
Poland's Monetary Policy Council may use unorthodox measures. Like the one used by Hungary to stimulate the economy, a new member of the panel, Eryk Lon was quoted as saying by the daily Nasz Dziennik.
Jaroslaw Kaczynski, the head of the Polish ruling partry PiS, reminded investors of another key risk to the zloty, urging a solution to the problem of costly Swiss franc mortgages in an interview with the weekly wSieci.
The stocks of Poland's second-biggest power producer, Tauron fell 2 percent, after it said that it could consider cutting investments, freezing dividends or issuing new shares to keep its debt under control.
While Polish and Czech government bond yields were mixed, Hungarian yields dropped by 1-2 basis points.
The 10-year paper traded at a yield of 2.9 percent, compared with 2.95 percent on the corresponding Polish paper.
Hungary's 10-year yield slipped below the Polish level last week and its entire yield curve is below Poland's, even though Hungary holds "junk" credit ratings and Poland's ratings are better by several notches.
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