CEE MARKETS 2-Hungary cuts auction, currencies steady

                                
 * Hungary cuts debt auction 30 percent, yield rises
                                
 * Czech 52-week T-bill yield rises 13 bps
                                
 * Romania inflation edges up due to weaker leu
                                
 * Stocks rise, FX steady; ECB meeting in focus
                                
 
 (adds debt tenders, updates prices)
                                
 By Marius Zaharia
                                
 BUCHAREST, June 10 (Reuters) - Hungary sold less than
planned on Thursday at its first T-bill auction after the
government announced its economic plan as investors remained
wary of fiscal problems in central Europe.
                                
 Debt agency AKK sold 35 billion forints in 12-month T-bill
tender, 30 percent less than it planned and the yield rose 18
basis points from the previous auction [ID:nBUD005372]
                                
 Hungary's fiscal plan to introduce a flat income tax, bank
levy and some spending cuts to keep the budget deficit at 3.8
percent of GDP was welcomed by the country's foreign lenders and
has eased market jitters for the time being.
                                
 But some details of the package are yet to be spelled out
and investors remain on their toes. Yields also rose at a T-bill
auction in Czech Republic [
                                
 "However that could be short-lived as the markets remain
unnerved. Hence, we continue to recommend that investors keep an
eye on the situation in Hungary."

                                
 
                                
 FISCAL WORRIES
                                
 Romania's May inflation data was better than expected, but
market players largely ignored it, focusing on a confidence vote
for the government's austerity package next Tuesday.
                                
 The drastic pay cuts planned by the government are vital for
an aid deal led by the IMF, the main anchor for investors
willing to finance Romania's huge budget gap.
                                
 Romania rejected bids at four debt tenders over the past six
weeks as investors demanded higher yields due to political risk.
                                
 "The figure should be slightly positive, but I don't expect
anything to happen in the market," one dealer in Bucharest said.
"What matters at the moment for ... foreign investors is the no
confidence vote."
                                
 Bulgarian five-year credit default swaps rose 10 basis
points on Thursday, still hit by Wednesday's comments from the
European Commission expressing concern about the quality of
statistics it reports. [ID:nLDE6580N6','yes')">ID:nPRA005104
                                
 Currencies gained back morning losses, tracking euro/dollar
moves ahead of an ECB meeting later in the day. Stocks were up
around 1 percent.
                                
 At 1031 GMT, the Hungarian forint <EURHUF=> traded 0.2
percent lower from the previous close, the Czech crown <EURCZK=>
and the Romanian leu <EURRON=> were 0.1 percent weaker, while
the Polish zloty <EURPLN=> was up a touch.
                                
 "The Hungarian government's action plan on the economy
perhaps calmed down the markets, Danske Bank said in a note.
                                
 "However that could be short-lived as the markets remain
unnerved. Hence, we continue to recommend that investors keep an
eye on the situation in Hungary."
                                
 
                                
 FISCAL WORRIES
                                
 Romania's May inflation data was better than expected, but
market players largely ignored it, focusing on a confidence vote
for the government's austerity package next Tuesday.
                                
 The drastic pay cuts planned by the government are vital for
an aid deal led by the IMF, the main anchor for investors
willing to finance Romania's huge budget gap.
                                
 Romania rejected bids at four debt tenders over the past six
weeks as investors demanded higher yields due to political risk.
                                
 "The figure should be slightly positive, but I don't expect
anything to happen in the market," one dealer in Bucharest said.
"What matters at the moment for ... foreign investors is the no
confidence vote."
                                
 Bulgarian five-year credit default swaps rose 10 basis
points on Thursday, still hit by Wednesday's comments from the
European Commission expressing concern about the quality of
statistics it reports. [ID:nLDE6580N6]
                                
 Hungary's CDS also rose 11 basis points, according to CMA
Datavision.
                                
 In Poland, a parliamentary committee approved on Wednesday
the candidacy of Marek Belka at the helm of the central bank
[ID:nWSF009178]. Markets have cheered his nomination earlier
this year but did not react to his comments on Wednesday.
                                
 He labelled the zloty as "relatively weak" at current levels
and backed currency interventions to avoid high volatility. He
also told the committee he though economic growth was more
important than inflation at this stage [ID:nWSF009177].
                                
 Polish bonds were steady and Hungarian yields were a touch
higher as some investors started to unwind long positions which
have dominated the market recently, dealers said.
--------------------------MARKET SNAPSHOT--------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2010 
Czech crown      <EURCZK=>  25.954   25.934   -0.08%    +1.4%
Polish zloty     <EURPLN=>   4.125    4.127   +0.05%    -0.51%
Hungarian forint <EURHUF=> 281.52   281       -0.18%    -3.97%
Croatian kuna    <EURHRK=>   7.231    7.238   +0.1%     +1.08%
Romanian leu     <EURRON=>   4.219    4.215   -0.09%    +0.44%
Serbian dinar    <EURRSD=> 103.35   103.803   +0.44%    -7.23%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR    -3 basis points to  162bps over bmk*
7-yr T-bond   CZ7YT=RR   +3 basis points to  +175bps over bmk*
10-yr T-bond   CZ9YT=RR    -4 basis points to  +166bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR    -4 basis points to  +415bps over bmk*
5-yr T-bond   PL5YT=RR    -4 basis points to  +384bps over bmk*
10-yr T-bond PL10YT=RR    0 basis points to  +324bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR   +5 basis points to  +633bps over bmk*
5-yr T-bond   HU5YT=RR   +8 basis points to  +597bps over bmk*
10-yr T-bond   HU10YT=RR  -1 basis points to  +500bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1331 CET.
Currency percent change calculated from the daily domestic 
close at 1600 GMT.
                                
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 (Reporting by Reuters bureaus, Writing by Marius Zaharia;
Editing by Jason Webb)