* HUF leads gains on short covering, risk appetite
* Hungary govt pensions plans yet to impact market
* Czechs sell less bonds than planned, yields fall
* Leu pressured ahead of no-confidence vote due next week
(Adds Poland CPI, updates markets, adds new comment)
By Dagmara Leszkowicz and Marton Dunai
WARSAW, Oct 20 (Reuters) - The Hungarian forint led modest
gains in Central European currencies on Wednesday as risk
appetite returned a day after a surprise rate hike in China
dented appetite for riskier assets, dealers said.
"There were jitters last week and many names shorted the
forint versus the zloty," one Budapest-based dealer said. "With
those jitters over, the shorters have unwound their positions
and we're lapping up the market."
He said that the Hungarian government's plans to suspend the
transfer of payments to private pension funds, deemed by some a
move towards a renationalisation of the pensions system, had yet
to trigger any market moves.
"We think this should ruffle more feathers than it has," he
said. "Overseas investors seem to have slept right through it.
The government might have succeeded in buying itself a couple of
years' time from pension funds' money."
Prime Minister Viktor Orban said his government will no
longer send payments to private pension funds, hinting that the
suspension of the payments, introduced last week as a temporary
measure until December 2011, may be permanent. []
At 1337 GMT the forint <EURHUF=> was 0.6 percent stronger
versus the euro, followed by the Czech crown <EURCZK=>, which
gained 0.2 percent. The Romanian leu <EURRON=> eased 0.2
percent.
The Polish zloty <EURPLN=> hovered at a key resistance level
of 3.96 versus the euro, 0.1 percent weaker on the day. Poland's
September net inflation numbers <PLNINF=ECI> did not surprise
markets, coming in at 1.2 percent as forecast.
"I expect the zloty to come back to its appreciation trend,
although in the short term it may weaken to 3.95-4.00 to the
euro," said one Warsaw-based dealer. "Privatisation inflows may
help to boost the currency."
On Tuesday, Poland's Treasury Ministry entered final talks
on the sale of a 51 percent stake in utility Enea <ENAE.WA>,
worth some $1.9 billion. []
Poland has raised more than half of its planned $8.1 billion
from privatisation this year. This should prove supportive for
the zloty as foreign investors will be buying assets as well, a
Warsaw dealer said.
Stocks in the region were mostly in negative territory,
barring Budapest's BUX <> which gained 0.3 percent, lifted
by Magyar Telekom <MTEL.BU> on news that the impact of a new
telecoms tax is likely to be milder than expected.
[]
BONDS GAIN
Czech bond yields fell at an auction of 14-year paper on
Wednesday, but the Finance Ministry sold less than originally
planned as a recent eurobond issue drained demand and investors
awaited details of next year's borrowing plans. []
Bond yields dropped in Hungary as well, as investors were
expected to buy all 50 billion forints worth of bonds at an
auction planned for Thursday. <HUISSUE>.
"The auction will show whether there is enough demand at
these levels to ignite buying," a bond dealer said in Budapest.
"The most important is that the government wants to meet the
deficit target (below 3 percent of GDP in 2011). That helped
yields fall by about half percentage point in September, the
correction we have seen (in the past week) is quite natural."
Pension funds say the government's plans to strip the sector
of state money will hurt them, but a top debt agency official
said that he expected healthy demand for bonds even as demand
from local pension funds weakens. []
Romanian assets fell after the opposition said it will call
a vote of no-confidence against the government's IMF-mandated
austerity policies. The vote is set for next Wednesday and is
expected to fail, though opposition leader Victor Ponta could
lure independent deputies to reach the needed threshold, keeping
political tensions high for the time being.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.493 24.536 +0.18% +7.45%
Polish zloty <EURPLN=> 3.962 3.959 -0.08% +3.58%
Hungarian forint <EURHUF=> 275.76 277.45 +0.61% -1.96%
Croatian kuna <EURHRK=> 7.33 7.326 -0.05% -0.28%
Romanian leu <EURRON=> 4.306 4.298 -0.19% -1.59%
Serbian dinar <EURRSD=> 105.74 105.9 +0.15% -9.32%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -5 basis points to +68bps over bmk*
7-yr T-bond CZ7YT=RR -10 basis points to +78bps over bmk*
10-yr T-bond CZ9YT=RR -6 basis points to +89bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -6 basis points to +378bps over bmk*
5-yr T-bond PL5YT=RR -9 basis points to +358bps over bmk*
10-yr T-bond PL10YT=RR -7 basis points to +312bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -12 basis points to +542bps over bmk*
5-yr T-bond HU5YT=RR -4 basis points to +521bps over bmk*
10-yr T-bond HU10YT=RR -3 basis points to +449bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1537 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, Writing by Dagmara Leszkowicz;
editing by Patrick Graham, John Stonestreet)
