* Forint rebounds, gains seem limited
* Leu up a touch after Senate backs VAT hike
* Other assets mixed, data in focus
PRAGUE, Aug 25 (Reuters) - The Hungarian forint edged up in
early trade on Wednesday as investors digested government
comments pointing to a renewal of talks with international
lenders.
Ruling Fidesz party vice chairman Lajos Kosa told TV2 on
Wednesday that Hungary will stay in touch with the International
Monetary Fund (IMF) after its existing deal with the Fund
expires.
This does not mean a new credit line is being opened, he
said, adding that Hungary will negotiate with the European Union
about an economic and fiscal path that would be acceptable.
The comments follow talk from the Economy Ministry late on
Tuesday that the country would resume talks with the IMF and EU
in the autumn after a halt to aid discussions in July.
Many investors have ditched Hungarian assets this week
because of risk aversion, while analysts have said a new aid
safety net would help cushion Hungarian financial markets.
The forint fell to three-week lows after the central bank
unveiled dimmer growth prospects on Monday and markets remain
wary over the lack of clarity regarding Hungary's 2011 budget
plans.
"Markets will take (the comments on the IMF) with a large
pinch of salt," RBC strategist Nigel Rendell said.
"The government has blown hot and cold with the IMF. The
market will only be happy with a hard deal in place."
The forint <EURHUF=> rose 0.4 percent to bid at 281.66 to
the euro by 0750 GMT, extending gains seen after the domestic
close on Tuesday. It has now regained 1.5 percent from lows hit
this week.
Rendell said the forint would likely stick in the 280-290
per euro range in the near term. "It will be very difficult to
get below 280," he said.
VOTES AHEAD
Hungary's centre-right Fidesz government, which won a
general election this year on a pro-growth strategy, faces
municipal elections on Oct. 3 and is viewed as unlikely to lay
out its 2011 budget plans ahead of the vote.
European governments face the challenge of cutting back
state budgets to meet EU criteria and to please investors, while
at the same time not damaging a fragile economic recovery that
is tipped to slow down in the last part of the year.
Hungary has a deficit target of 3.8 percent of GDP for this
year, which is one of the lowest in the EU, but it has a high
relative public debt level at 83 percent of GDP and it relies
heavily on foreign financing.
In Romania, the leu <EURRON=> inched up 0.1 percent after
the upper house of parliament backed a hike in value added tax
(VAT) viewed as vital to keeping an IMF-led rescue on track, but
the government still faces a tight final parliamentary vote next
month.
Other assets were mixed. The Polish zloty <EURPLN=> rose 0.3
percent and the Czech crown <EURCZK=> dipped less than 0.1
percent, while Budapest stocks <> added 1.2 percent and
Bucharest <> dropped 0.7 percent.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.875 24.866 -0.04% +5.8%
Polish zloty <EURPLN=> 3.998 4.008 +0.25% +2.65%
Hungarian forint <EURHUF=> 281.66 282.75 +0.39% -4.02%
Croatian kuna <EURHRK=> 7.28 7.28 0% +0.4%
Romanian leu <EURRON=> 4.233 4.238 +0.12% +0.1%
Serbian dinar <EURRSD=> 105.06 105.26 +0.19% -8.74%
All data taken from Reuters at 0951 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet; Editing
by John Stonestreet)
