* Fx off lows but weaker as Spain concern pushes back euro
* Stocks mixed, leu resilient after govt survives vote
* Demand strong at Czech bond auction, weak at Polish tender
* Hungary bond auction watched on Thursday
(Recasts with fresh prices, comments)
By Dagmara Leszkowicz and Sandor Peto
WARSAW/BUDAPEST, June 16 (Reuters) - Central European
currencies were off intraday lows in late trade on Wednesday but
eased from Tuesday as fresh concerns over Spain's debt pushed
back the euro from two-week highs against the U.S. dollar.
The euro <EUR=> is Central Europe's reference unit and tight
financial and trade links with the West of Europe also make the
region vulnerable to the euro zone debt crisis.
"The currencies are coming back now (rebounding) as the euro
also firmed past 1.23 (against the dollar), after easing to
about 1.2250 earlier today," one Budapest-based currency dealer
said.
The euro's earlier retreat followed a rise in the spread of
10-year Spanish government bond yields over German Bunds to a
euro life high after a report about an international liquidity
plan for Spain, even though the report was denied.
[]
News about the euro debt crisis caused general asset price
falls in Central Europe several times this year.
The reaction to Wednesday's news in the region was mixed.
The main stock indices stayed near Tuesday's closing levels,
apart from Romania's <> which firmed 2.7 percent and among
currencies Romania's leu <EURRON=> was relatively resilient,
weakening by only 0.2 percent against the euro by 1435 GMT.
The region's most liquid currencies, the zloty <EURPLN=> and
the forint <EURHUF=>, shed 0.7 and 0.6 percent, respectively,
while the Czech crown<EURCZK=> lost 0.4 percent.
Romania's government late on Tuesday survived a
no-confidence vote in parliament.
The vote gave it a mandate to cut public spending as
required under the IMF deal, but a tight margin of victory
raised concerns over the coalition's ability to push beyond the
austerity plan. []
"The failure of the no-confidence vote should provide some
relief to investors, at least until September," analysts at
Citibank wrote in a note.
"The narrow margin of the victory, however, paints a
challenging picture in terms of the government's ability to
press ahead with the reform agenda under the umbrella
of the IMF programme."
Romania followed Hungary's lead during the financial crisis
by securing a 20 billion euro International Monetary
Fund/European Union lifeline to alleviate funding worries.
DEBT AUCTIONS MIXED, HUNGARY NEXT
An auction of 10-year Czech government bonds attracted solid
demand and the government sold 6.95 billion crowns worth of
papers in the non-competitive round of bidding, well above its
4.25 billion crown plan. []
The yield on the bond <CZ1002547=> was flat on the day in
later trade at 4.639 percent, rising back to levels seen before
the auction.
Demand at a Polish 10-year bond auction was only a touch
above the 2.43 billion zlotys worth of bonds sold and traders
said investors were seeking shorter maturities.[]
Yields were well above levels seen at previous primary sales
in April, although they rose only slightly after the auctions.
Investors closely watch government debt auctions in the
region amid the debt concerns in the European Union.
Hungary, the region's most indebted state, will hold bond
auctions on Thursday.<HUISSUE> Hungarian bond prices extended
their losses after the Spanish news, and yields traded higher by
about 10 basis points from Tuesday.
"I think the auctions will be weak and bonds may be sold at
even higher yield levels than now," one Budapest-based trader
said. For a preview on the auctions pls click on []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.742 25.633 -0.42% +2.24%
Polish zloty <EURPLN=> 4.087 4.057 -0.73% +0.42%
Hungarian forint <EURHUF=> 280.4 278.64 -0.63% -3.58%
Croatian kuna <EURHRK=> 7.21 7.211 +0.01% +1.38%
Romanian leu <EURRON=> 4.232 4.223 -0.21% +0.13%
Serbian dinar <EURRSD=> 103.47 103.063 -0.39% -7.34%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +8 basis points to 151bps over bmk*
7-yr T-bond CZ7YT=RR +4 basis points to +169bps over bmk*
10-yr T-bond CZ9YT=RR +6 basis points to +152bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +11 basis points to +638bps over bmk*
5-yr T-bond HU5YT=RR +15 basis points to +592bps over bmk*
10-yr T-bond HU10YT=RR +16 basis points to +497bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1635 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Dagmara
Leszkowicz/Sandor Peto; editing by Stephen Nisbet and Toby
Chopra)
