* Possible crisis tax extension hits Budapest equities
* Forint dips, other FX mixed, leu the only gainer
* Zloty tests double-bottom level, break possible
(Adds comments, updates markets)
By Jason Hovet and Marton Dunai
PRAGUE/BUDAPEST, Nov 10 (Reuters) - Budapest shares fell
sharply on Wednesday on news the government may extend a crisis
tax on banks and energy firms, while currencies and bonds in the
region tracked other emerging markets to end little changed.
Hungarian banking stocks fell more than 5 percent and oil
group MOL shed 6 percent, dragging the Budapest index <>
down by 4.7 percent, its steepest daily fall since late May, to
its lowest level since the end of August.
The country's stock market was by far the biggest faller
among central European bourses that were already pressured by a
pullback from risk following weak Chinese import data.
Hungary's government is factoring in an annual 93.5 billion
forints ($470 million) from a special tax on the financial
sector in 2012-14, and billions more from other sectors,
according to a document submitted to parliament.
This is half of what the government plans to collect this
year and next from the bank tax. []
Special crisis taxes were expected to expire after 2012.
The IMF, the central bank and the European Union have all
criticised the crisis taxes, and while the government's drive to
cut the budget deficit has been seen as positive, the measures
used have also unnerved investors. []
"Changes (in) ...domestic regulations... have become usual
on a daily basis, which is negative, in our view, mainly if it
comes to Hungarian assets' general attractiveness," said
Budapest broker Equilor, adding it could lead to further
underperformance by Hungarian assets.
Budapest stocks have risen 4.9 percent this year, compared
with a 12 percent gain in Prague <> and a 22.5 percent rise
in Warsaw <>, according to Reuters data.
CURRENCIES, BONDS STEADY
Currencies and bonds regionwide avoided the storms of the
Budapest stock market and were broadly steady.
The forint <EURHUF=> was 0.2 percent lower against the euro
at 1514 GMT, as was the Czech crown <EURCZK=>. The Polish zloty
<EURPLN=> was flat.
Hungary's bond market was quiet, with yields stuck in tight
ranges as investors weigh a safe 2011 budget target against
long-term sustainability risks, a dealer said. Uncertainties
concerning the medium-term outlook are not sufficient to move
the market right now, he added.
The Romanian leu <EURRON=> added 0.1 percent, showing little
reaction as IMF-mandated tax increases boosted inflation to 7.9
percent, in line with expectations.
Dealers say the leu should not react to gross domestic
product data due later this week as markets are focusing mainly
on risks to the International Monetary Fund deal.[]
The zloty was near a more than six-month high and tested the
3.890/euro resistance level which it briefly broke below on
Tuesday.
"If sustained, this move paves the way for the cross for
further zloty gains towards the next key support level of
3.8230," Danske Bank said in a note.
The Polish currency ignored a set of data released in the
afternoon, including a narrowing trade deficit and a widening in
the current account deficit in September. []
Analysts expect the zloty to rise more than its emerging
European peers in the coming months, supported by expectations
of a rate hike this year and better growth prospects.
[]
A second round of quantitative easing in the United States
is pushing more money into emerging markets as investors chase
higher growth and yields.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.614 24.569 -0.18% +6.92%
Polish zloty <EURPLN=> 3.897 3.897 0% +5.31%
Hungarian forint <EURHUF=> 273.94 273.45 -0.18% -1.31%
Croatian kuna <EURHRK=> 7.357 7.356 -0.01% -0.65%
Romanian leu <EURRON=> 4.28 4.285 +0.12% -1%
Serbian dinar <EURRSD=> 106.94 107.02 +0.07% -10.34%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +9 basis points to 68bps over bmk*
7-yr T-bond CZ7YT=RR +5 basis points to +90bps over bmk*
10-yr T-bond CZ9YT=RR +5 basis points to +99bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +5 basis points to +387bps over bmk*
5-yr T-bond PL5YT=RR +8 basis points to +373bps over bmk*
10-yr T-bond PL10YT=RR +6 basis points to +325bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +4 basis points to +564bps over bmk*
5-yr T-bond HU5YT=RR +4 basis points to +535bps over bmk*
10-yr T-bond HU10YT=RR +1 basis points to +465bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1614 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
For related news and prices, click on the codes in brackets: All
emerging market news []
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(Reporting by Reuters bureaus, writing by Jason Hovet, editing
by John Stonestreet)
