* Euro zone debt crisis continues to hit region
* Hungary auction cut, investors digest pension plans
* Romania to auction euro debt to meet maturing debt
(Adds Hungary bonds, Romania cbank)
By Jason Hovet
PRAGUE, Nov 25 (Reuters) - Emerging European stocks gave up
early gains on Thursday and the Polish zloty fell near its
lowest this month as investors stayed negative on the region due
to the euro zone debt crisis and concerns about Hungarian
policy.
Hungary cut a 12-month bill sale and the yield jumped 11
basis points from an auction two weeks ago. []
It was the first auction since the government announced a
plan to give it more power in central bank appointments.
Investors were also weighing details of government changes to
the pension system aimed at shoring up the budget.
Yields on the secondary bond market rose by up to 20 basis
points, with the 3-year hitting its highest this year.
"The international sentiment is not good, and the latest
domestic news about the central bank and pensions are not good
either," a fixed income trader said.
Ahead of a planned euro debt sale in Romania, the central
bank governor said the finance ministry should wait until it
pays off a maturing bill next Monday before selling debt on the
market again. []
The forint <EURHUF=> lost 0.8 percent to bid at 277.55 to
the euro by 1059 GMT, while the Polish zloty <EURPLN=> fell 0.6
percent to wipe out gains from Wednesday.
The Czech crown <EURRON=> and Romanian leu <EURRON=>, which
have both clung inside ranges this month as activity on local
markets falls, added up to 0.1 percent.
Stock markets rose by up to 0.6 percent, led by Prague
<>. Trade was less liquid with the United States off for the
Thanksgiving holiday.
Dealers said that while Ireland's austerity plans have
calmed markets somewhat, worries were growing about spillover
into other highly indebted euro periphery states such as
Portugal or even Spain.
"It's one thing what's going on with Ireland, but more
importantly, the question is whether this (crisis) escalates," a
Budapest currency dealer said.
ROMANIA SALE
Hungary's government gave taxpayers until the end of January
to return to the state pension scheme or face drastic cuts in
future entitlements, a move that private pension funds on
Wednesday denounced as "outright blackmail". []
In Romania, which with Hungary has been among the most
vulnerable to risk aversion associated with the euro zone debt
crisis, the finance ministry plans to sell 1 billion euros ($1.3
billion) in 3-year, 4.5 percent coupon bonds on the local
market.
The issue would help repay 1.4 billion euros worth of
treasury bills that mature at the end of November, and analysts
expect a successful sale. Depending on the price the ministry is
willing to accept, they could raise more than planned.
Romania has struggled with local currency debt sales this
year and has been unwilling to accept higher yields demanded by
investors due to risks around the government budget plans needed
to meet international aid conditions.
Analysts still say borrowing in euros carries more risks
than benefits in the long run.
"If they pay between 4.7 and 5 percent (today), they will
probably get more than 1.4 billion euros," Nicolaie
Alexandru-Chidesciuc, ING Bank Romania's chief economist, said.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.68 24.702 +0.09% +6.64%
Polish zloty <EURPLN=> 3.979 3.957 -0.55% +3.14%
Hungarian forint <EURHUF=> 277.55 275.22 -0.84% -2.59%
Croatian kuna <EURHRK=> 7.41 7.41 0% -1.36%
Romanian leu <EURRON=> 4.298 4.303 +0.12% -1.41%
Serbian dinar <EURRSD=> 107.00 106.99 -0.01% -10.39%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +3 basis points to 79bps over bmk*
7-yr T-bond CZ7YT=RR +16 basis points to +85bps over bmk*
10-yr T-bond CZ9YT=RR +4 basis points to +98bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +4 basis points to +374bps over bmk*
5-yr T-bond PL5YT=RR +5 basis points to +361bps over bmk*
10-yr T-bond PL10YT=RR +9 basis points to +330bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +19 basis points to +627bps over bmk*
5-yr T-bond HU5YT=RR +10 basis points to +589bps over bmk*
10-yr T-bond HU10YT=RR +21 basis points to +523bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1201 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet; Editing
by Ruth Pitchford)
