* Dollar rise hits risk, Hungary awaits economic plan
* Forint hits October low, CEE stocks down as much as 1 pct
* Romania's leu steady after expected no-confidence motion
(Updates forint, adds stocks, Romania govt)
PRAGUE, Oct 18 (Reuters) - The Hungarian forint fell to its
lowest so far this month on Monday, leading losses in central
Europe as a firming dollar hit risk appetite and investors
pulled back before the release of Budapest's economic plans.
Hungarian Prime Minister Viktor Orban, whose cabinet
submitted a range of tax proposals to parliament over the
weekend, is set to give details on his cabinet's second economic
action plan after 1100 GMT on Monday.
Markets will listen to his speech carefully for clues on how
the government plans to overhaul economic policy to ensure it
meets next year's budget deficit target of 2.8 percent of GDP.
[]
Analysts have said they will focus on how the government
uses the fiscal room created by the new tax measures while
forgoing the tough austerity steps others in Europe are taking.
The forint <EURHUF=> lost 0.8 percent to 276.65 per euro by
0751 GMT but was off its lowest point this month at 277.25 hit
earlier.
Dealers said external factors such as the dollar's
performance against the euro, the region's reference currency,
drove markets.
"The dollar will set the course, not local factors. The
prime minister's policy speech is not likely to move markets
directly," a Budapest-based currency dealer said.
Central European stock markets fell as much as 1 percent.
The zloty <EURPLN=> fell 0.4 percent to 3.92.
The Czech crown <EURCZK=> and the Romanian leu <EURRON=>
dipped up to 0.1 percent, with the latter unaffected by an
opposition leader saying he would file a no-confidence motion
against the government, a move that had been expected.
[]
PLANS UNDER REVIEW
Hungary's cabinet introduced plans on Saturday to cut
personal income taxes and raise child benefits. The measure
followed a plan on Friday to levy extra taxes on the energy,
telecoms and retail sectors. [] []
The government will also suspend state transfers to private
pension funds from November until the end of next year to meet
its targets on deficit cuts, a measure which pension funds said
amounted to "covert nationalisation".
Hungary is targeting a deficit of 3.8 percent of GDP this
year and has pledged to cut the gap to below 3 percent next year
under pressure from the European Union.
While the proposed measures will likely enable the
government to meet its deficit targets, the lack of expenditure
cuts and structural measures in the plans so far have raised
concerns over sustainability of deficit cuts, analysts said.
In Romania -- which like Hungary sought an IMF lifeline
during the economic crisis -- the leftist opposition Social
Democrats are expected to file their no-confidence motion
against the fragile centrist coalition government on Monday,
with a vote possible next week.
Romania's efforts to draft a credible budget for 2011 will
be the focus of its talks with the International Monetary Fund,
which is due to begin on Oct. 20 a review of the 20 billion euro
rescue plan. []
The finance ministry is also due to auction off 1 billion
lei ($327 million) worth of 182-day treasury bills, and traders
expect it to stick to its 7 percent yield cap.
Many investors have demanded higher yields, leaving the
ministry selling less than planned at auctions since May.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.514 24.499 -0.06% +7.36%
Polish zloty <EURPLN=> 3.926 3.903 -0.59% +4.53%
Hungarian forint <EURHUF=> 276.65 274.4 -0.81% -2.28%
Croatian kuna <EURHRK=> 7.338 7.321 -0.23% -0.39%
Romanian leu <EURRON=> 4.281 4.279 -0.05% -1.02%
Serbian dinar <EURRSD=> 105.92 105.89 -0.03% -9.48%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -3 basis points to 85bps over bmk*
7-yr T-bond CZ7YT=RR +3 basis points to +97bps over bmk*
10-yr T-bond CZ9YT=RR +2 basis points to +102bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1115 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet; Editing
by Hugh Lawson)
