BUDAPEST: Central European assets mostly declined on Friday as a continuing rise in US Treasury bill yields to seven-year highs sparked selling in emerging markets.
The Indian central bank's surprise decision not to increase interest rates also left investors uneasy.
In Central Europe, closely integrated with the euro zone, a jump in German industrial orders in August removed a risk, driven by the auto sector which is also a key contributor to economic output in the European Union's eastern wing.
August Polish data released earlier showed slower output growth and Hungary also reported a slowdown on Friday.
The forint eased 0.15 percent to 325.25 against the euro by 0912 GMT, and the zloty shed 0.1 percent to 4.3105.
Both units were off multi-week lows set on Thursday when they were knocked down by expectations that the Federal Reserve may increase interest rates more than earlier expected.
A rise in US Treasury and Bund yields weighed on the region's government bond markets.
Hungary's 10-year papers traded at a yield of 3.7 percent early in the session, up 5 basis points and only a few basis points below 3-year highs.
Poland's corresponding yield reached its highest levels since mid-May, trading around 3.34 percent, above the 3.3 psychological line, and the Czech 10-year yield also rose slightly, approaching 4-1/2 year highs.
"Polish yields mostly correlate with Bunds," one Budapest-based fixed income trader said, adding that the yield spread of Hungary, where central bank rates are lower and inflation is higher, may rise over Poland if pressure remains.
In the next few days, Polish bonds could get support from an expiry on National Road Fund and government bonds, Santander Bank analysts said in a note.
Poland has already financed 85 percent of its 2018 borrowing needs.
"Any further pressure from UST will likely drive Polish yields further up," Raiffeisen analyst Stephan Imre said in a note, adding that a likely strengthening of the zloty against the euro kept the outlook for Polish bonds bullish.
Romania's sale of eurobonds worth 1.75 billion euros did not reduce pressure on its leu-denominated bonds. Its 10-year papers were bid at a yield of 4.92 percent, up 7 basis points .
The leu traded steady at 4.671 versus the euro, off the 3-1/2 month lows reached on Thursday.
The Bucharest stock exchange's main index, however, resisted a 0.3-0.5 percent decline in Budapest, Prague and Warsaw.
The Bucharest index, rising 0.7 percent, reached its highest levels since mid-May, driven by the Romanian unit of Austrian oil and gas group OMV, whose shares rose to a 3-year high.
The unit, OMV Petrom, sold a further nine domestic production fields to Dutch Mazarine Energy, continuing its portfolio optimisation programme.
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