* Region shrugs off solid Q2 growth data
* Hungarian forint plumbs new low versus Swiss franc
* Traders see leu testing 4.3/euro, eye cbank intervention
By Michael Winfrey
PRAGUE, Sept 8 (Reuters) - Central European assets shrugged
off final second quarter growth data on Wednesday as risk
appetite remained volatile and pressure built against Hungary's
cabinet over budget performance and a clash with the central
bank.
Hungary's forint plumbed fresh record lows past 225 per
Swiss franc <CHFHUF=>, pressured by renewed gains in the franc
against the euro. It was down 0.9 percent versus the franc at
0800 GMT.
The forint has dropped more than 8.5 percent against the
franc since Aug. 20. With some 55 percent of Hungary's mortgages
in the Swiss currency, the forint's slide has caused a spike in
monthly payments for borrowers and eclipsed the worst-case 215
per franc level from central bank stress tests this year.
"We don't expect too much good news for Swiss franc loan
holders," a Budapest-based currency dealer said.
"This little bounce back (from levels past 225) to stronger
levels seems to hold up for now, but apparently the global mood
has again taken a turn for the worse and the franc is making
headway versus the euro."
Against the euro, the forint was down 0.14 percent to 288.17
per euro at 0747 GMT. Poland's zloty was down 0.28 percent, and
Romania's leu down less than 0.1 percent.
Dealers said Prime Minister Viktor Orban's refusal to
replace Hungary's 20 billion euro EU and International Monetary
Fund aid deal with a new one has heightened pressure on the
currency dealers say is the most exposed in the region.
Media reported on Wednesday that EU officials told Hungary's
economy minister in Brussels he needed to plug a hole of 0.3-0.5
percentage points of gross domestic product in this year's
budget deficit to avoid missing its 3.8 percent goal.
That followed data on Tuesday showing Hungary's end-July
budget gap had ballooned to 124 percent of the full-year goal.
They also said Hungary would have to bring its 2011 deficit
to below 3 percent of GDP, which Prime Minister Viktor Orban's
new government has suggested it could resist. []
GROWTH LINE
Positive data helped boost the Czech crown, showing the
economy grew stronger than expected in the second quarter, by
0.9 percent versus the previous three months, and unemployment
eased slightly to 8.6 percent. [] []
But analysts said Hungarian numbers showing annual growth of
1 percent from April to June was largely due to a low base
effect, and the economy stagnated in quarterly terms.
In the other country seen as most risky, Romania, data
showed industrial output fell by 0.8 percent on the month in
July [].
Bucharest's government faces a series of potentially close
votes over an austerity plan tied to an EU/IMF bailout.
Political uncertainty hit debt issuance earlier this week
and dealers said it would likely spread to the currency market.
"We see potential for the leu to hit 4.32 per euro in the
coming days on the back of concerns over the government's
austerity measures and the global mood for risk," BNP Paribas
said in a morning note.
Other events expected on Wednesday included a 1.5-3.0
billion zloty bond auction in Poland and the Czechs' offer of 7
billion crowns in 3-year bonds, a day after yields on its
benchmark 5-year and 9-year papers hit an all time low.
Dealers said they expected strong demand following Prague's
placement of a 2 billion euro, 10-year Eurobond that the finance
ministry said closed out its borrowing needs until early 2011.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.699 24.68 -0.09% +6.55%
Polish zloty <EURPLN=> 3.946 3.94 -0.28% +4.0%
Hungarian forint <EURHUF=> 288.17 287.77 -0.14% -6.18%
Croatian kuna <EURHRK=> 7.283 7.28 -0.05% +0.36%
Romanian leu <EURRON=> 4.286 4.28 -0.07% -1.13%
Serbian dinar <EURRSD=> 105.27 105.31 +0.04% -8.92%
(Reporting by Michael Winfrey; editing by Patrick Graham)
