* Stocks, FX rise, forint and zloty lead, leu underperforms
* Romania cuts debt auction, Polish and Slovak sales smooth
* Romania no-confidence vote, Hungary auction to be watched
* Debt concerns not certainly over.
(Recasts with new prices and comments.)
By Jason Hovet and Sandor Peto
PRAGUE/BUDAPEST, June 14 (Reuters) - Central European assets
continued to recover on Monday after a plunge early this month
but a smaller than hoped-for sale of Romanianian 6-month
Treasury bills indicated that debt concerns have not dissipated
fully.
Romania sold about a third of the planned amount of bills
and the yield rose 36 basis points to 6.74 percent, one day
before the government faces a no-confidence vote.[]
Uncertainty over Tuesday's vote and the government's ability
to make tough spending cuts in the budget have pushed yields
sharply up, prompting the Romanian Finance Ministry to reject
bids at four auctions since May 6. []
The sale stood in contrast to a tender at which Poland sold
1.18 billion zloties worth of 52-week bills, near the top of the
0.8-1.2 billion zloty offer range. []
Euro zone member Slovakia, whose elections held on Saturday
are likely to oust Prime Minister Robert Fico [],
sold 110 million euros worth of 6-year bonds on Monday.
But yields ticked up in both countries: to 3.946 percent in
Poland from 3.932 percent at an auction held a week ago, and to
3.3724 percent in Slovakia from 3.3535 percent a month ago.
The weak Romanian auction also follows a 30 percent cut in
Hungary's 12-month Treasury bill offer last week.
Sentiment in the region's debt markets remains tense as the
euro zone debt crisis continues, with some Spanish banks facing
a liquidity squeeze.[]
Central European debt levels are well below those in many
euro zone states, but the region's markets plunged in early June
after Hungarian government officials made comments suggesting
Hungary was close to a Greek-style debt crisis, which they later
said were exaggerated and unfortunate.
"I think there are lingering concerns... However, the acute
worry has probably passed," said Gunnar Tersman, analyst at
Handelsbanken. "After the Hungarians clarified their rather
unsettling remarks, people understood that Hungary is no new
Greece. All markets have of course benefited from this," he
added.
MARKETS UP, HUNGARY/ROMANIA WATCHED
Hungary's forint <EURHUF=> has regained some 4 percent
against the euro after its falls early this month.
It firmed by 0.6 percent against the euro by 1405 GMT on
Monday, while the zloty <EURPLN=> -- the region's most liquid
currency -- gained 0.7 percent. The Czech crown <EURCZK=>
strengthened by 0.5 percent, while Romania's leu <EURRON=>
lagged, rising only 0.1 percent.
The region's main stock exchange indices rose to 7-10 day
highs, firming 0.6-1.2 percent amid a rise in risk appetite in
global markets, even though they underperformed the broader
emerging share index <.MSCIEF> which rose 1.6 percent.
Polish government bonds firmed, with yields dropping by 6
basis points, but Hungarian government bonds were flat as the
market awaits the Thursday's auctions, the country's first
primary bond sales since the market turmoil in early June.
Rating agency Fitch said after last week's cut in Hungary's
bill auction that it was not concerned over the country's
immediate financing capacity as Hungary was backed by
substantial funds at home and from abroad. []
Analysts said the likely formation of a new centre-right
government in Slovakia was positive as that could end friction
with neighbouring Hungary.
Romania's government is expected to survive Tuesday's
no-confidence vote, but investors will continue to watch its
efforts to cut spending, and political risks to fiscal
consolidation remain an issue in several Central European
states, analysts said.
"These are tail risks... which will come to the fore if
there are further periphery Europe headwinds," said Peter Attard
Montalto, analyst of Nomura International.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.632 25.747 +0.45% +2.68%
Polish zloty <EURPLN=> 4.076 4.104 +0.69% +0.69%
Hungarian forint <EURHUF=> 279.57 281.33 +0.63% -3.3%
Croatian kuna <EURHRK=> 7.217 7.226 +0.12% +1.28%
Romanian leu <EURRON=> 4.223 4.228 +0.12% +0.34%
Serbian dinar <EURRSD=> 103.08 103.46 +0.37% -6.98%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -15 basis points to 135bps over bmk*
7-yr T-bond CZ7YT=RR +1 basis points to +172bps over bmk*
10-yr T-bond CZ9YT=RR -5 basis points to +150bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -8 basis points to +411bps over bmk*
5-yr T-bond PL5YT=RR -9 basis points to +374bps over bmk*
10-yr T-bond PL10YT=RR -10 basis points to +311bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +1 basis points to +625bps over bmk*
5-yr T-bond HU5YT=RR -3 basis points to +577bps over bmk*
10-yr T-bond HU10YT=RR -10 basis points to +483bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1605 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/Sandor
Peto; Editing by Susan Fenton/Ruth Pitchford/Jason Webb)
