* Rising stocks give FX a lift
* Markets watch afternoon Romania debt tender
* Finance Minister says can afford to reject bids again
(Adds details, bond prices)
By Jason Hovet
PRAGUE, June 14 (Reuters) - Rising stock markets boosted
central European currencies on Monday, with the Romanian leu up
a touch before a closely watched Romanian debt tender later in
the day that will precede a government no-confidence vote.
Uncertainty over Tuesday's vote and the government's ability
-- if it survives -- to make tough spending cuts in the budget
have pushed yields sharply up, prompting the Romanian Finance
Ministry to scrap three auctions since May 6. []
Analysts expect Bucharest, which received a 20 billion euro
IMF/EU aid package, will have to swallow higher yields or reject
all bids again at Monday's sale of six-month treasury bills
expected some time after 1000 GMT.
The leu <EURRON=> rose 0.1 percent to 4.223 to the euro by
0833 GMT, rebounding after bidding overnight at 4.2443, its
lowest level since May 6. Dealers said they expected the central
bank to counter any weakening pressure.
"Regional sentiment will continue to dominate and the
central bank will likely intervene if the leu starts sliding," a
Bucharest dealer said.
Investors have become worried about Bucharest's ability to
enforce austerity needed to meet the conditions of its aid
agreement.
Finance Minister Sebastian Vladescu was quoted as saying on
Monday that Romania can afford to reject bids at debt tenders if
yields asked by investors are too high. []
Worries about debt levels in eastern Europe have caused some
investors to wonder if some countries could face a similar
situation to Greece.
BACK ON TRACK, BUT STILL RISKS
The Hungarian forint has gained 3 percent since falling to a
one-year low on June 4 after government officials made comments,
later downplayed, suggesting Hungary was close to a Greek-style
debt crisis.
Hungary's new centre-right government pledged last week to
keep the budget deficit at the target agreed with lenders the
International Monetary Fund and European Union with, among other
things, a new bank tax that may hinder lending and growth.
On Monday, the forint <EURHUF=> led gains with a 0.3 percent
rise to bid close to the psychological 280 per euro level.
Danske Bank said some weakening was still in store for the unit
and said a good trade was long Polish zloty against the forint.
Hungary cut back its own bill auction last week and faces
another borrowing test on Thursday with planned bond sales.
The yield on the Hungarian 10-year bond dropped two basis
points on Monday to 7.48 percent, piercing the 7.5 percent level
that many analysts and dealers believe will be a bottom.
In Poland, bonds were stable and the zloty <EURPLN=> rose
0.2. The Czech crown <EURCZK=> was flat. Stock markets tracked
western markets higher, gaining 0.5 percent to 1.5 percent.
"Equity markets rose, the euro is firmer (against the
dollar) and the whole region is rising," one Budapest-based
currency dealer said. "It's possible that the forint can
strengthen beyond 280 (against the euro) today."
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.749 25.747 -0.01% +2.21%
Polish zloty <EURPLN=> 4.094 4.104 +0.24% +0.24%
Hungarian forint <EURHUF=> 280.35 281.33 +0.35% -3.57%
Croatian kuna <EURHRK=> 7.221 7.226 +0.07% +1.22%
Romanian leu <EURRON=> 4.223 4.228 +0.12% +0.34%
Serbian dinar <EURRSD=> 103.34 103.46 +0.12% -7.22%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -3 basis points to 162bps over bmk*
7-yr T-bond CZ7YT=RR -4 basis points to +166bps over bmk*
10-yr T-bond CZ9YT=RR -8 basis points to +157bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -3 basis points to +416bps over bmk*
5-yr T-bond PL5YT=RR -7 basis points to +378bps over bmk*
10-yr T-bond PL10YT=RR -6 basis points to +317bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -3 basis points to +621bps over bmk*
5-yr T-bond HU5YT=RR -7 basis points to +573bps over bmk*
10-yr T-bond HU10YT=RR -6 basis points to +486bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1034 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 Susan Fenton/Ruth Pitchford)
