* Hungary aid deal news adds boost to market
* Forint off lows vs franc, other FX steady vs euro
* Zloty supported by Tauron stock debut
* Romania, Polish cbanks seen on hold with rates
(Adds bonds, Czech politics, updates prices)
By Jason Hovet
PRAGUE, June 30 (Reuters) - The forint rebounded from record
lows against the Swiss franc on Wednesday on news Hungary would
seek a new, standby IMF deal, while the leu recovered versus the
euro on expectations Romania would meet its aid conditions.
News of the Hungarian deal gave a small lift to other
central European currencies before the region slipped from early
morning highs.
Romania's leu bucked the trend and added 0.8 percent versus
the euro to cut a region-leading loss for June to 4 percent.
Central European governments have struggled to convince
investors they can keep fiscal plans on track, with economic
recoveries still fragile in several countries and debt troubles
plaguing the euro zone.
The International Monetary Fund gave a strong signal on
Tuesday that it was set to release further aid for Romania,
easing nerves the deal could be derailed. []
Markets also expect the country's central bank to stop its
rate easing cycle on Wednesday, holding the main interest rate
at 6.25 percent, after the leu weakened sharply when the
government hiked the value added tax by five percentage points
to 24 percent to meet IMF aid requirements. []
"Today's central bank meeting is very important, more than
others," a trader said.
The leu <EURRON=> bid at 4.353, off a record low of 4.39 to
the euro. The Czech crown <EURCZK=>, which has held steady this
month, inched down 0.1 percent on the day.
The forint bid at around 216.70 versus the franc <CHFHUF=>,
off session lows of 218, and gained 0.3 percent against the euro
by 0825 GMT. Bond yields were flat.
Hungarian PM aide Gyorgy Szapary told www.fn.hu that while
the Hungarian government was not planning to draw upon the new
loan, a precautionary deal could boost markets' confidence.
The country would also extend its existing financing deal
with the International Monetary Fund by two months until the end
of 2010, he said. []
The safe-haven franc has gained since the Swiss National
Bank this month backed off a pledge to intervene in FX markets.
WEAK DEBUT
Poland's zloty <EURPLN=> rose a touch from Tuesday's
domestic close and around half a percent from overnight lows,
supported by the debut of utility Tauron on the Warsaw bourse --
Europe's fourth largest initial public offering this year.
The utility's shares lost almost 1 percent, but Warsaw
blue-chip stocks <> gained 0.4 percent. []
Poland's central bank is expected to leave borrowing costs
flat at an all-time low of 3.5 percent on Wednesday. Markets
will mainly be eyeing comments from new Governor Marek Belka.
Poland, along with the Czech Republic, are seen among the
first to tighten rates, either later in 2010 or early 2011.
Czech markets welcomed a deal between the incoming
three-party, centre-right coalition government overnight that
divided up the key cabinet posts, including the appointment of
austerity advocate Miroslav Kalousek as finance minister.
Longer-dated bond yields fell 7-9 basis points on Wednesday,
with the benchmark 2019 <CZ1002471=> yield at a six-week low.
European markets are also focussed on a three-month tender
by the European Central Bank ahead of the expiry of a 12-month
operation on Thursday. []
Investors fear Thursday's expiry could leave some banks
facing a liquidity shortfall.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.775 25.749 -0.1% +2.11%
Polish zloty <EURPLN=> 4.143 4.144 +0.02% -0.94%
Hungarian forint <EURHUF=> 286.42 287.17 +0.26% -5.61%
Croatian kuna <EURHRK=> 7.195 7.195 0% +1.59%
Romanian leu <EURRON=> 4.353 4.388 +0.8% -2.66%
Serbian dinar <EURRSD=> 104.07 104.38 +0.3% -7.87%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -3 basis points to 139bps over bmk*
7-yr T-bond CZ7YT=RR -10 basis points to +159bps over bmk*
10-yr T-bond CZ9YT=RR -8 basis points to +149bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR 0 basis points to +650bps over bmk*
5-yr T-bond HU5YT=RR 0 basis points to +603bps over bmk*
10-yr T-bond HU10YT=RR +3 basis points to +512bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1026 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 Patrick Graham/Ruth Pitchford)
