* Forint extends bounce off 1-year low, OTB stock rises
* Markets await Hungary's action plan after Greece comments
* Hungary T-bill sale due at 0930 GMT
* Trade choppy, to stay volatile
(Updates prices, adds data, Romania)
By Jason Hovet
PRAGUE, June 8 (Reuters) - The forint extended a rebound from a one-year low on Tuesday and shares in Hungary's largest bank rose as investors awaited details of government action designed to calm fears the country was struggling to control its finances.
Hungarian Prime Minister Viktor Orban was due to speak later in the day. His government pledged on Monday to cut spending and aim to hold the budget deficit at the 3.8 percent of annual economic output target agreed with lenders.
Analysts and dealers expect choppy trade after last week's government comments suggesting that Hungary was close to a Greek-style debt crisis, which dragged down central Europe and hit global assets like the euro and oil. [
]The forint <EURHUF=> bid 0.3 percent up at 283.99 per euro by 0939 GMT, moving further off a one-year low hit on Friday but still down 3 percent since last Wednesday. Bond yields dropped up to 10 basis points before a treasury bill sale at midday.
Romania's leu <EURRON=> rose 0.3 percent and the Czech crown <EURCZK=> 0.1 percent. The Polish zloty <EURPLN=> was flat.
Orban was due to outline details from an economic action plan in a speech in Parliament at 13:00 local time (1100 GMT).
"At these levels, clients are more willing to sell (euro vs forint), but activity is very low," a dealer said in Budapest.
"We await the Orban speech, but don't expect miracles from it. The forint is rather vulnerable, it will not be nearly as easy to calm investors as it was to send the forint into a nosedive with a couple of ill-advised comments."
Budapest stocks <
> rose 1.5 percent after the open before falling to trade flat on the day.Leading bank OTP <OTPB.BU> rose 3.5 percent. Vienna-based Erste Group Bank <ERST.VI>, a major lender in central Europe, also rose more than 1 percent.
On Tuesday, news portal Index reported Hungary's government has likely abandoned the idea of channelling private pension funds into the state budget as a form of raising revenues due to opposition from the IMF and the European Union.
But citing several unnamed sources, Index said the government would most probably go ahead with a plan to impose some kind of special tax on banks' profits. [
]* For a TAKE A LOOK on Hungary, double-click [
]
HUNGARY NOT GREECE
While analysts say Hungary's debt woes are far less serious than those of Greece and fund investors have yet to flee Hungary and central Europe entirely, the region was unlikely to recover quickly and trade would stay volatile. [
]"We reiterate our opinion that markets previously overreacted," SEB said in a trade note in which it also recommended buying a euro/zloty put spread.
"With volatility likely to remain elevated in the near term but given the fundamentally unjustified contagion from Hungary to the zloty and our bullish view on the zloty in the medium- and long-term we released (the) recommendation," it said.
The International Monetary Fund chief and euro zone finance ministers downplayed market fears on Monday. [
]Fund managers also said on Monday Hungarian politicians had been clumsy in their attempts to warn voters of austerity measures, adding the comments were designed for a domestic audience.
Analysts expect central European economic growth to outpace that of western EU members this year, though the pace is still dependent on trade to the euro zone.
Romania's adjusted industrial output growth slowed in April, hit by a choppy recovery in the euro zone and further denting hopes the economy will exit recession this year. [
]Bucharest dealers said investors were on the sidelines before a government no-confidence vote for proposed pay cuts next week, crucial to its own IMF-led aid package.
--------------------------MARKET SNAPSHOT-------------------- Currency Latest Previous Local Local
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today in 2010 Czech crown <EURCZK=> 25.967 26.00 +0.13% +1.35% Polish zloty <EURPLN=> 4.145 4.145 0% -0.99% Hungarian forint <EURHUF=> 283.99 284.9 +0.32% -4.8% Croatian kuna <EURHRK=> 7.254 7.252 -0.03% +0.76% Romanian leu <EURRON=> 4.218 4.235 +0.4% +0.46% Serbian dinar <EURRSD=> 103.54 103.31 -0.22% -7.4% Yield Spreads Czech treasury bonds <0#CZBMK=> 2-yr T-bond CZ2YT=RR 0 basis points to 165bps over bmk* 7-yr T-bond CZ7YT=RR +1 basis points to +173bps over bmk* 10-yr T-bond CZ9YT=RR +1 basis points to +174bps over bmk* Polish treasury bonds <0#PLBMK=> 2-yr T-bond PL2YT=RR +2 basis points to +420bps over bmk* 5-yr T-bond PL5YT=RR +4 basis points to +393bps over bmk* 10-yr T-bond PL10YT=RR +4 basis points to +331bps over bmk* Hungarian treasury bonds <0#HUBMK=> 3-yr T-bond HU3YT=RR +2 basis points to +636bps over bmk* 5-yr T-bond HU5YT=RR 0 basis points to +609bps over bmk* 10-yr T-bond HU10YT=RR -7 basis points to +528bps over bmk* *Benchmark is German bond equivalent. All data taken from Reuters at 1043 CET. Currency percent change calculated from the daily domestic close at 1600 GMT. For related news and prices, click on the codes in brackets: All emerging market news [
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