* Romania bond sale fails amid fiscal uncertainty
* FX mostly firmer as Portugal deepens austerity drive
* Region's assets boosted by Wednesday's GDP data
(Updates throughout)
By Sandor Peto and Marius Zaharia
BUDAPEST/BUCHAREST, May 13 (Reuters) - Central European
currencies were mostly higher on Thursday on the back of fresh
austerity moves in the debt-ridden euro zone, but markets in
Romania lagged as a government bond sale failed to find buyers.
The bounceback, boosted by news of further deficit-reduction
measures in Portugal, was also driven by better than expected
growth data from Hungary and the Czech Republic released on
Wednesday, which suggested the region's economic recovery was
gaining traction.
Czech and Hungarian T-bill tenders on Thursday saw demand at
roughly twice the amount on sale, with the yield rising
marginally in Hungary. [] []
But Romania sold nothing of a planned 900 million lei ($271
million) of three-year bonds [].
Pressure on Bucharest to cut a ballooning budget deficit has
increased since the International Monetary Fund said it will
disburse the next tranche of a rescue loan only after Romania
takes additional austerity measures.
The government announced plans to sharply cut wages and
pensions from June, but faces stiff opposition from powerful
trade unions amid legal uncertainties.
"Things seem to have calmed down abroad, but locally we've
got hazy fiscal prospects," said Vlad Muscalu, economist at ING
Bank in Bucharest. "Nobody is rushing to invest here especially
because if they (the government) do not take drastic measures by
June, they won't get the next tranche."
The Romanian leu <EURRON=> lagged again, falling 0.2 percent
by 1401 GMT on concerns the planned austerity measures would hit
growth. The Polish zloty <EURPLN=> traded 0.6 percent firmer
from the previous close, while the Czech crown <EURCZK=> and the
Hungarian forint <EURHUF=> were up 0.4 percent.
MIXED PICTURE IN HUNGARY
Hungarian economy minister designate Gyorgy Matolcsy said
the incoming administration would focus on economic growth
rather than on joining the euro zone, which was in turmoil.
[]
Hungarian government bonds were mixed after some profit
taking in the morning.
Yields have come down 60-90 basis points this week, with
short-end prices gaining more as that segment was worst hit by
last week's sell-off. But yields are still well above lows
reached last month and sentiment remains fragile.
"If the international sentiment remains positive, that will
be the key factor.. and yields can go further down," one trader
said.
"A number of factors will play: the assessment of the debt
of Mediterranean countries, the forint's movements and also how
the incoming government will communicate about economic policy."
Regional stocks were mixed, with Romania's <> and
Hungary's <> bourses up 1-3 percent from the previous day,
while Czech and Polish stocks fell 0.5-1 percent.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.337 25.437 +0.39% +3.87%
Polish zloty <EURPLN=> 3.959 3.984 +0.63% +3.66%
Hungarian forint <EURHUF=> 272.29 273.31 +0.37% -0.71%
Croatian kuna <EURHRK=> 7.252 7.254 +0.03% +0.79%
Romanian leu <EURRON=> 4.182 4.173 -0.22% +1.32%
Serbian dinar <EURRSD=> 99.947 99.897 -0.05% -4.07%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +5 basis points to 100bps over bmk*
7-yr T-bond CZ7YT=RR +6 basis points to +101bps over bmk*
10-yr T-bond CZ9YT=RR +1 basis points to +89bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +3 basis points to +399bps over bmk*
5-yr T-bond PL5YT=RR -2 basis points to +338bps over bmk*
10-yr T-bond PL10YT=RR -2 basis points to +263bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +4 basis points to +526bps over bmk*
5-yr T-bond HU5YT=RR -2 basis points to +477bps over bmk*
10-yr T-bond HU10YT=RR -1 basis points to +392bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1701 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaux, writing by Sandor Peto and
Marius Zaharia; editing by John Stonestreet))
