* Fx firm on euro/dollar, forint and leu lead
* Bonds, stocks firm, sentiment fragile ahead of U.S. data
* Romania IMF talks, Hungary bank tax issue watched
(Releads, adds Hungary minister, bonds, comments)
By Marton Dunai and Sandor Peto
BUDAPEST, July 2 (Reuters) - Central European currencies
rebounded on Friday from recent losses as the euro gained versus
the dollar, indicating improved risk appetite.
Investors were watching Romania's talks with the
International Monetary Fund (IMF) as well as U.S. non-farm
payroll data, due at 1230 GMT.
The forint <EURHUF=D2> and the leu <EURRON=> gained 0.9
percent against the euro by 0910 GMT. The Polish zloty <EURPLN=>
-- the region's most liquid currency -- firmed 0.5 percent.
The Czech crown <EURCZK=>, the only emerging European
currency to post gains versus the euro so far this year, was 0.1
percent stronger.
Hungarian Economy Minister Gyorgy Matolcsy told Reuters on
Friday he hoped international lenders would agree a budget
deficit for 2011 of 3.0-3.8 percent of GDP, not under 3 percent
as agreed earlier.
He also said the largest foreign banks in Hungary had
withdrawn from talks about a bank tax but the bill on the tax
would be submitted to parliament on Friday anyway.
[]
"The forint has been underperforming (in the past weeks) due
to these uncertainties," one Budapest-based trader said.
"These currencies had a bigger part in the previous
weakening (in June), too, they have been more volatile than the
zloty," the dealer said.
Government bonds in the region firmed, with yield spreads
over corresponding Bunds narrowing by a few basis points.
Central Europe's main stock exchange indices rose, led by
Bucharest's <> and Budapest's <>, which firmed by 1.4
and 1 percent, respectively. Warsaw's <> rose half a
percent, while the Czech <> added 0.3 percent.
IMF TALKS, POLISH PRESIDENTIAL ELECTIONS
The IMF needs to decide whether to release the next 850
million euro tranche of aid to Romania.
"If the IMF approves the scheduled disbursement of the fifth
tranche, as we expect, this would translate in a relief for the
RON, which is around 2.5 percent weaker than last week, when the
decision of the Constitutional Court put pressure on Romanian
assets," UniCredit said in a note.
Romania's constitutional court last week ruled against
planned pension cuts, compelling the government to hike value
added tax by 5 percentage points to 24 percent.
Hungary will also start talks with the IMF and the European
Commission next week about the review of its existing loans and
a possible extension.
Analysts remained wary of chances for economic recovery,
with UniCredit saying the outlook would prompt central banks to
postpone interest rate hikes in the region to 2011.
The Czech central bank says risks to its macroeconomic
forecasts remain balanced, but uncertainty also remains high.
[]
In Poland, the central bank's inflation projection showed
economic growth may accelerate to 3.2 percent this year and
should speed up further in 2011 to 4.6 percent mainly thanks to
increased public investment. []
The second round of Poland's presidential elections will be
held on Sunday. Business-friendly Bronislaw Komorowski faces
conservative Jaroslaw Kaczynski in a race that is too close to
call.
"The vote will be a close call and will be a determinant for
the political picture in the coming 5 years," Cheuvreux analyst
Simon Quijano Evans said in a note.
"If Mr. Komorowski wins, we can expect a calmer picture as
far as presidential-government relations are concerned."
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.695 25.726 +0.12% +2.42%
Polish zloty <EURPLN=> 4.146 4.165 +0.46% -1.01%
Hungarian forint <EURHUF=> 284.58 287.16 +0.91% -5%
Croatian kuna <EURHRK=> 7.191 7.194 +0.04% +1.64%
Romanian leu <EURRON=> 4.301 4.34 +0.91% -1.48%
Serbian dinar <EURRSD=> 104.19 104.49 +0.29% -7.98%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -1 basis points to 102bps over bmk*
7-yr T-bond CZ7YT=RR +12 basis points to +152bps over bmk*
10-yr T-bond CZ9YT=RR +1 basis points to +136bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR 0 basis points to +409bps over bmk*
5-yr T-bond PL5YT=RR -1 basis points to +387bps over bmk*
10-yr T-bond PL10YT=RR -1 basis points to +325bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -3 basis points to +624bps over bmk*
5-yr T-bond HU5YT=RR -5 basis points to +601bps over bmk*
10-yr T-bond HU10YT=RR 0 basis points to +508bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1110 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaux, writing by Marton Dunai and
Sandor Peto, Editing by Sonya Hepinstall)
