* Forint falls to 15-mth low vs Swiss franc, worry to banks
* Investors watching Romania court ruling on austerity
* Fx, stocks, bonds drop on increased risk aversion
* Hungary cuts 12M bill auction, demand light at Czech sale
(Updates with new prices/comments)
By Jason Hovet and Sandor Peto
PRAGUE/BUDAPEST, June 24 (Reuters) - Hungary's forint led losses among Central European currencies on Thursday, hitting a 15-month low against the Swiss franc and triggering concerns over the sizeable amount of Swiss franc loans held by Hungarian households.
Assets fell across the region as the euro and euro zone periphery government debt remained under pressure, increasing risk aversion, with the biggest currency losses in the region's most liquid units.
The forint <EURHUF=> and the zloty <EURPLN=> fell 1 and 0.6 percent against the euro, respectively, by 1331 GMT. The Czech crown <EURCZK=> eased 0.2 percent to 25.735.
Romania's leu also weakened against the euro, with investors keeping a wary eye on a possible court ruling later in the day over austerity measures considered key to continued aid.
The forint's slide against the Swiss franc came after the Swiss National Bank last week backed off its earlier policy to stem the franc's firming.
"The Swiss franc is kind of a safe haven. Investors get rid of emerging assets and the franc's firming signals risk aversion," one Budapest-based dealer said. "The forint can easily weaken to between 210-215."
BONDS EASE, HUNGARY CUTS AUCTION
Central European markets have been rattled recently by growing worries over the region's ability to rein in budget deficits, especially in IMF-aid recipients Romania and Hungary.
Debt yields have risen across the region since May, making it difficult for Romania to sell its bonds and treasury bills.
On Thursday, Hungarian bond yields rose, tracking the forint's weakening, mainly in shorter maturities as the yield curve becomes less steep, with the market pricing out central bank interest rate cuts expected earlier. The 3-year yield rose 20 basis points to 7.1 percent.
Polish bond yields rose by up to 5 basis points. Yield spreads over corresponding Bunds widened across the region, while Central Europe's main stock exchange indices dropped 0.1-1.1 percent, tracking a worsened sentiment in developed equity markets.
Hungary sold 10 billion forints ($50.86 million) less than planned at a 12-month bill sale, and demand was light at a Czech sale. [
] [ ]Hungary's government hopes to cut the 2011 budget deficit to levels agreed with lenders, Deputy Prime Minister Tibor Navracsics said late on Wednesday [
], but markets shrugged off domestic news."I expect the forint to stabilize between 280 and 285 against the euro. Bond yields can rise further by about 10 basis points, but they can stabilize there," one fixed income trader said.
Romania's government survived a parliamentary no-confidence vote on June 15 over planned tough public sector pay cuts. The constitutional court may decide later on Thursday whether the austerity measures are legal, and investors have mostly priced in a ruling in which the cuts are upheld. [
]But the court has a history of overturning reform packages. A court rejection of the cost-saving measures would further postpone International Monetary Fund aid, increasing financing risks. [
]Romanian 5-year credit default swaps widened around 9 basis points to a nearly two-week high of 380 bps on Thursday.
The leu <EURRON=> inched down 0.1 percent to 4.233 to the euro, sticking around its lowest levels this year.
"If the cuts pass then the leu's firming should be rather modest, as the market has priced in that the measures will pass. Should they be rejected, we will likely see sudden depreciation," a Bucharest trader said. --------------------------MARKET SNAPSHOT-------------------- Currency Latest Previous Local Local
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today in 2010 Czech crown <EURCZK=> 25.735 25.695 -0.16% +2.27% Polish zloty <EURPLN=> 4.104 4.08 -0.58% 0% Hungarian forint <EURHUF=> 283.38 280.67 -0.96% -4.6% Croatian kuna <EURHRK=> 7.194 7.191 -0.04% +1.6% Romanian leu <EURRON=> 4.233 4.228 -0.12% +0.1% Serbian dinar <EURRSD=> 103.73 104.04 +0.3% -7.57%
Yield Spreads Czech treasury bonds <0#CZBMK=> 2-yr T-bond CZ2YT=RR +9 basis points to 144bps over bmk* 7-yr T-bond CZ7YT=RR +6 basis points to +164bps over bmk* 10-yr T-bond CZ9YT=RR 0 basis points to +144bps over bmk* Polish treasury bonds <0#PLBMK=> 2-yr T-bond PL2YT=RR +10 basis points to +434bps over bmk* 5-yr T-bond PL5YT=RR +7 basis points to +398bps over bmk* 10-yr T-bond PL10YT=RR +4 basis points to +334bps over bmk* Hungarian treasury bonds <0#HUBMK=> 3-yr T-bond HU3YT=RR +25 basis points to +643bps over bmk* 5-yr T-bond HU5YT=RR +21 basis points to +605bps over bmk* 10-yr T-bond HU10YT=RR +10 basis points to +507bps over bmk* *Benchmark is German bond equivalent. All data taken from Reuters at 1531 CET. Currency percent change calculated from the daily domestic close at 1600 GMT. For related news and prices, click on the codes in brackets: All emerging market news [
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