* Hungary raises bond sale, yields lower than secondary mkt
* Forint gains as budget commitment seen favourable
* Czech inflation spells no rate hike yet
By Sandor Peto and Marton Dunai
(Releads, adds bonds, updates markets)
BUDAPEST, Sept 9 (Reuters) - Hungary's currency and debt
markets rose on Thursday as it sold more bonds than planned a
day after the government appeared to back down in a fight with
the EU over the scale of fiscal tightening.
The debt agency sold 70 billion forints of 3, 5 and 10-year
bonds, 20 billion more than planned amid very high demand after
the government committed to cutting the budget deficit to below
3 percent of gross domestic product in 2011. []
Yields were higher than at the last auction but below recent
secondary market levels, a dealer said.
"The demand was very strong, after (government) comments
coincided with improving risk appetite, also signalled by
(Wednesday's) Polish and Portuguese bond auctions," he said.
"The (debt agency) AKK wanted to send a message, that they
are able to sell debt even at elevated quantities."
Hungary's forint <EURHUF=> extended gains, trading 0.6
percent stronger against the euro by 1017 GMT, against a 0.1
rise in the Polish zloty <EURPLN=>. The Czech crown <EURCZK=>
and the Romanian leu <EURRON=> were flat.
The forint had hit record lows against the Swiss franc
<CHFHUF=> on Wednesday, adding to concern about the huge amount
of franc loans held by Hungarian households. The CHF/HUF pair
traded almost 2 percent off those highs at 1025 GMT, hovering at
221.50 versus Wednesday's highs around 226.
After months of mixed signals from Budapest, however,
analysts said, that Hungary would have to demonstrate it was
fully behind Economy Minister Gyorgy Matolcsy's comments and how
it will reduce the deficit despite still poor economic growth.
"What do we need to see to become convinced? First,
hopefully some additional statements, preferably from PM Victor
Orban, that are consistent with the message delivered by
Minister Matolcsy," Barclays analysts said in a client note.
"Second, some suggestions of concrete measures the
government plans to implement to achieve the 2011 target."
Hungary's stock market underperformed regional peers,
however, with the <> index dipping a quarter of a percent by
1013 GMT, compared to marginal gains in Prague <> and Warsaw
<>. A 1.1 percent slide in the shares of OTP Bank
<OTPB.BU> weighed on the Hungarian index.
CZECH INFLATION SPELLS FLAT RATES
Elsewhere in the region, the Czech crown, Romania's leu and
the Croatian kuna were broadly unchanged, while Poland's zloty
was just a touch higher.
The Czech Republic reported that consumer prices dipped by
0.3 percent in August from July. The resulting 1.9 percent
annual inflation rate was a touch below forecasts.
The figures reduced expectations for an imminent interest
rate hike which had been fuelled by strong domestic consumption
data on Wednesday.
"I share the view that the Czech National Bank does not have
to rush debate on monetary tightening at its September meeting,"
said Radomir Jac, analyst of Generali PPF Asset management.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.678 24.675 -0.01% +6.65%
Polish zloty <EURPLN=> 3.934 3.939 +0.13% +4.32%
Hungarian forint <EURHUF=> 285.17 286.9 +0.61% -5.2%
Croatian kuna <EURHRK=> 7.283 7.286 +0.04% +0.36%
Romanian leu <EURRON=> 4.281 4.282 +0.02% -1.02%
Serbian dinar <EURRSD=> 104.89 105.08 +0.18% -8.59%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +6 basis points to +86bps over bmk*
7-yr T-bond CZ7YT=RR -5 basis points to +92bps over bmk*
10-yr T-bond CZ9YT=RR -2 basis points to +81bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -4 basis points to +401bps over bmk*
5-yr T-bond PL5YT=RR -6 basis points to +390bps over bmk*
10-yr T-bond PL10YT=RR -7 basis points to +315bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -13 basis points to +629bps over bmk*
5-yr T-bond HU5YT=RR -16 basis points to +587bps over bmk*
10-yr T-bond HU10YT=RR -7 basis points to +497bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1217 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 Reuters bureaus, writing by Sandor Peto; Editing
by Patrick Graham)
