* CEE currencies, bonds ease after Romanian court ruling
* Romania court says planned pension cuts illegal
* Romanian finmin says no debt repayment problem for now
* Leu falls over 1 pct vs euro, forint sheds half pct
(Adds details, new prices)
By Sandor Peto and Krisztina Than
BUDAPEST, June 25 (Reuters) - Romania's bonds and leu currency dived on Friday, dragging Central European currencies lower, after its Constitutional Court rejected parts of a key austerity package, endangering its IMF aid. [
]The leu <EURRON=> sank 1.1 percent against the euro by 0957 GMT. The forint <EURHUF=> of Hungary, which is also tightening budget policy sharply to meet agreements with international lenders, shed half a percent to 285.30.
"Obviously the (Romanian) news is highly concerning and there is a real danger that this could impact the IMF deal negatively if the government does not come up with alternative measures so the market reaction is totally justified," said Lars Christensen, analyst at Danske Bank in Copenhagen.
The disbursement of a 2 billion euro tranche of an IMF/EU loan hinges on the court's decision and the ruling aggravates financing risks for Romania, which is already struggling to sell debt.
Romanian Finance Minister Sebastian Vladescu said after the ruling that the country can handle paying its debt at the moment. [
]Romanian sovereign Eurobonds fell sharply, although five-year credit default swaps -- the cost of insuring debt against default -- were quoted only a shade wider at 368 basis points. [
]The concerns over Romania came at a time when worries over the euro zone's own debt crisis is keeping market sentiment fragile.
"Some investors may need to close positions in Greece, and some of the same hedge funds may also work here and withdraw money," one Budapest-based dealer said.
HUNGARY FX LOAN HOLDERS HIT
The forint's fall against the euro further widened its losses against the Swiss franc, pushing it to a 15-month low of 211.57 <CHFHUF=> and fuelling concerns over the sizeable amount of Swiss franc loans held by Hungarian households.
The region was trading on a weaker note anyway as the euro and peripheral euro zone borrowers remained under pressure, increasing risk aversion generally, while concerns over budgets weighed on Hungarian and Romanian debt auctions.
Hungary cut the value of its 12-month Treasury bill auction on Thursday due to low demand, and yields at the sale rose. After weeks of rising yields, Hungarian government bonds shrugged off the forint's fall on Friday, but were fragile, traders said.
Unicredit said in a note that while the weak bill auction in Hungary was negative news but not a particular reason for concern, the Swiss franc's firming was a factor to watch closely.
"(The bill auction was) not dramatic but the second time in a row this has sent a clear negative reaction to investors," Unicredit said.
"However, we are not overly worried about the potential demand for t-bills as the banking sector is still over-liquid. On the other hand we are particularly worried about the current CHF/HUF level which... was only 2 percent below last year's all-time highs," it said.
A sharply higher franc could make it hard for Hungarian borrowers to meet loan repayments.
Elsewhere in the region, the zloty <EURPLN=> shed 0.4 percent against the euro, while Polish government bond yields rose a few basis points.
"Sentiment has been weak for some time; information from Romania just prompted investors to sell Polish papers," said Krzysztof Izdebski, a dealer at PKO BP in Warsaw.
But Poland's main equity index, the <
> rose slightly, bucking the general European trend of equity falls. Romania's < > share index fell by over 5 percent. --------------------------MARKET SNAPSHOT-------------------- Currency Latest Previous Local Localclose currency currency
change change
today in 2010 Czech crown <EURCZK=> 25.841 25.79 -0.2% +1.85% Polish zloty <EURPLN=> 4.132 4.117 -0.36% -0.68% Hungarian forint <EURHUF=> 285.3 283.79 -0.53% -5.24% Croatian kuna <EURHRK=> 7.195 7.195 0% +1.59% Romanian leu <EURRON=> 4.281 4.235 -1.07% -1.02% Serbian dinar <EURRSD=> 103.91 103.42 -0.47% -7.73%
Yield Spreads Czech treasury bonds <0#CZBMK=> 2-yr T-bond CZ2YT=RR -13 basis points to 133bps over bmk* 7-yr T-bond CZ7YT=RR +2 basis points to +163bps over bmk* 10-yr T-bond CZ9YT=RR -2 basis points to +144bps over bmk* Polish treasury bonds <0#PLBMK=> 2-yr T-bond PL2YT=RR +5 basis points to +498bps over bmk* 5-yr T-bond PL5YT=RR +3 basis points to +339bps over bmk* 10-yr T-bond PL10YT=RR +1 basis points to +331bps over bmk* Hungarian treasury bonds <0#HUBMK=> 3-yr T-bond HU3YT=RR 0 basis points to +644bps over bmk* 5-yr T-bond HU5YT=RR 0 basis points to +595bps over bmk* 10-yr T-bond HU10YT=RR +1 basis points to +509bps over bmk* *Benchmark is German bond equivalent. All data taken from Reuters at 1157 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 [
] Spot FX rates Eastern Europe spot FX <EEFX=> Middle East spot FX <MEFX=> Asia spot FX <ASIAFX=> Latin America spot FX <LATAMFX=> Other news and reports World central bank news [ ] Economic Data Guide <ECONGUIDE> Official rates [ ] Emerging Diary [ ] Top events [ ] Diaries [ ] Diaries Index [ ] (Reporting by Krisztina Than; editing by Stephen Nisbet)