* Hungary doubles bond sale, yields fall further
* Forint gains as budget commitment seen favourable
* Romania seeks new IMF deal after May 2011
* Czech inflation spells no rate hike yet
By Sandor Peto and Marton Dunai
(Adds new prices, comment, Romania IMF deal)
BUDAPEST, Sept 9 (Reuters) - Hungary's currency and debt
markets rose on Thursday as the country doubled its bond auction
sale a day after the government appeared to back down in a fight
with the European Union over the scale of fiscal tightening.
The debt agency AKK sold altogether 95 billion forints worth
of 3, 5 and 10-year bonds at its auctions and a top-up sale,
almost twice the original 50 billion forint offer.
Demand was boosted by the government's vow to cut the budget
deficit to below 3 percent of gross domestic product in 2011, by
elevated yield levels after global market jitters in the past
weeks and improved international market mood. []
Yields were higher than at the last auction but about 7
basis points below Wednesday's secondary market levels and fell
further by 18-28 basis points after the auctions.
"The demand was very strong, after (government) comments
coincided with improving risk appetite, also signalled by
(Wednesday's) Polish and Portuguese bond auctions," one trader
said.
The drop in bond yields confounded some traders as it came
on the heels of minutes of the central bank's last rate meeting
which showed growing support within the bank for an rate hike
[].
One trader said the last two days' high volatility which
moved yields in ranges of about half percentage point was
"abnormal" and there was risk of a quick reversal.
"I'm sceptical (about future trends)," the trader said.
Polish bond yields, meanwhile, rose a few basis points,
still leaving their spreads over corresponding Bunds still
narrower by 3-4 basis points. Five-year bond yields were at 5.24
percent, 3 basis points higher from Wednesday.
FORINT LEADS CURRENCY GAIN
Hungary's forint <EURHUF=> extended gains, trading 0.8
percent stronger against the euro by 1557 GMT at 284.7, against
a 0.2 percent rise in the Polish zloty <EURPLN=> and the
Romanian leu <EURRON=>.
Romanian President Traian Basescu said the country would
seek a precautionary aid deal with the International Monetary
Fund once its existing loan deal expires in May. []
Hungary, which has also been bailed out by the IMF, has said
that it does not want a new deal.
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 1416 GMT, hovering at
221.30 versus Wednesday's highs around 226.
After months of mixed signals from Budapest, however,
analysts said Hungary would have to demonstrate it was fully
behind the deficit cut plan and how it will reduce the deficit
despite still poor economic growth. []
Elsewhere in the region, the Czech crown was broadly
unchanged.
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.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.668 24.675 +0.03% +6.69%
Polish zloty <EURPLN=> 3.933 3.939 +0.15% +4.35%
Hungarian forint <EURHUF=> 284.7 286.9 +0.77% -5.04%
Croatian kuna <EURHRK=> 7.283 7.286 +0.04% +0.36%
Romanian leu <EURRON=> 4.274 4.282 +0.19% -0.86%
Serbian dinar <EURRSD=> 104.89 105.08 +0.18% -8.59%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +5 basis points to 84bps over bmk*
7-yr T-bond CZ7YT=RR -6 basis points to +92bps over bmk*
10-yr T-bond CZ9YT=RR -2 basis points to +82bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -4 basis points to +402bps over bmk*
5-yr T-bond PL5YT=RR -4 basis points to +392bps over bmk*
10-yr T-bond PL10YT=RR -3 basis points to +320bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -32 basis points to +611bps over bmk*
5-yr T-bond HU5YT=RR -30 basis points to +573bps over bmk*
10-yr T-bond HU10YT=RR -30 basis points to +474bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1557 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Sandor Peto; editing
by Stephen Nisbet)
