BUDAPEST: The zloty gained after Poland reported retail sales rose more than expected last month, while most Central European currencies weakened as mixed euro zone economic data put the euro on uncertain footing against the dollar.

The Polish currency had underperformed other regional currencies this week and hit a 16-month low against the forint on Wednesday, reflecting an expected divergence in monetary policies in Hungary and Poland.

A rise in core inflation is widely expected to prompt some monetary tightening in Hungary in March, while Polish inflation -- running at an annual 0.9 percent in January -- has remained below the Polish central bank's 1.5 to 3.5 percent target.

The zloty slid on Wednesday after the head of the Polish central bank said the bank might cut rather than raise interest rates if business activity slows.

Polish PMI factory activity figures showed a contraction in January, but data for January, including Thursday's retail sales figures, indicated faster growth than expected. Retail sales grew 6.6 percent, above analysts' 6.1 percent forecast.

The zloty strengthened to 4.3316 against the euro by 1039 GMT. The forint shed 0.1 percent to 317.44.

The forint was still stronger than its 30-day moving average of 318.48, while the zloty remained below its 4.298 average versus the euro. Against the forint, it was bid at 73.19, off 16-month lows at 72.9282.

Government bond yields rose in the region, tracking a similar increase in euro zone yields.

Hungary's 10-year yield rose 3 basis points to 2.7 percent. Poland's corresponding yield was up 2 basis points at 2.66 percent.

Romania's 10-year yield was bid higher by 3 basis points at 4.93 percent. The leu eased 0.1 percent to 4.7582 versus the euro, retesting Wednesday's three-week lows.

New taxes imposed this year on banks and energy companies have weighed on Romanian assets. News about corruption has also often been a drag on prices, and the European Commission on Wednesday criticized a Romanian emergency decree that changes judicial legislation.

On the same day, the ruling Social Democrats nominated party treasurer Mircea Draghici to lead the country's election bureau, although he is under investigation over suspected illegal use of party subsidies.