* 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 debt than
planned on Thursday at its first T-bill auction since the
government announced steps to rein in the budget deficit, as
investors remained wary of fiscal problems in central Europe.
Debt agency AKK sold 35 billion forints in 12-month tender,
30 percent less than anticipated, and the yield rose 18 basis
points from the previous auction []
Hungary's plan for a flat income tax, bank levy and some
spending cuts to keep this year's deficit at 3.8 percent of GDP
was welcomed by the country's foreign lenders and eased market
jitters for the time being.
But details of the package have yet to be spelled out,
keeping investors on their toes. Yields also rose at a T-bill
auction in the Czech Republic. []
Currencies recovered early 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
Inflation data from Romania was roughly in line with
forecasts and largely ignored by investors who remained focusing
on a confidence vote for the government's austerity package next
Tuesday.
Drastic pay cuts planned by the government are key for an
aid deal led by the IMF, the main anchor for investors willing
to finance Romania's huge budget gap.
Romania has rejected bids at four debt tenders over the past
six weeks as investors demanded higher yields due to political
risk.
"The (inflation) 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 under pressure from Wednesday's
comments from the European Commission expressing concern about
the quality of statistics the country reports. []
Hungary's CDS rose 11 basis points, according to CMA
Datavision.
In Poland, a parliamentary committee approved on Wednesday
the candidacy of Marek Belka as head of the central bank
[]. Markets cheered his nomination earlier this
year but did not react to his comments on Wednesday.
He called the zloty as "relatively weak" at current levels
and backed currency interventions to avoid high volatility. He
also told the committee he thought economic growth was more
important than inflation at this stage [].
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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brackets: All emerging market news []
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(Reporting by Reuters bureaus, Writing by Marius Zaharia;
Editing by Jason Webb, John Stonestreet)
