* Czech crown, bonds, await parliament fiscal vote
* Czech cbank seen keeping rates flat at meeting
* Romanian no-confidence vote against govt seen failing
(adds fixed income, detail, quotes)
By Marius Zaharia
BUCHAREST, Sept 24 (Reuters) - Central European currencies
were stable to slightly stronger on Thursday, with investors
eyeing key votes in the Czech and Romanian parliaments and a
central bank meeting in Prague, where rates are seen on hold.
The Czech parliament is due to vote on austerity measures
aimed at cutting next year's budget deficit [].
The crown had edged up after an agreement among parties
looked close on Wednesday, but some players still saw risks that
the budget cuts would fail to pass, a prospect the interim
government has said would trigger its resignation.
"So far there are signals across the political spectrum that
the agreement could be reached as soon as today," Komercni Banka
said in a note.
"Otherwise there is risk ... that the cabinet will step
down. This risky scenario could push politicians to act
responsibly. We expect some kind of market relief reaction in
this case, otherwise there is a risk of bonds sell-off."
The debate is over a package to raise taxes by 50 billion
crowns ($2.92 billion) and cut spending by about 25 billion. Its
aim is to reduce the planned fiscal deficit from an expected 7.5
percent of gross domestic product to 5.2 percent.
The Czech central bank (CNB) is expected to hold rates flat
on Thursday after trimming borrowing costs by a total of 250
basis points to a record low of 1.25 percent [].
In Romania, markets were watching for a no-confidence vote
against the nine-month-old government [].
There have been rifts within the coalition ahead of a
presidential poll on Nov. 22 but the likelihood of a split
subsided after the leftist partners pledged to stay in power.
At 0933 GMT, the Romanian leu <EURRON=> was 0.4 percent up
in thin trade, the crown <EURCZK=> and the Hungarian forint
<EURHUF=> were 0.1 percent stronger, while the Polish zloty
<EURPLN=> edged up 0.2 percent.
FRAGILE RECOVERY
Analysts noted signs of stabilisation in the region in
recent months, but warned the recovery would be slow because
widening budget deficits would prompt fiscal tightening measures
which would limit growth, while non-performing loans and
unemployment have yet to peak.
The Ifo business sentiment in Germany, the region's main
trading partner, climbed to its highest in a year in September
but fell short of expectations for a stronger rise, signalling
the recovery will be sluggish [].
EBRD president Thomas Mirow said on Wednesday the credit
crunch was far from over and that the region may enter a period
of low or zero growth [].
Poland is the only country in eastern European Union which
avoided recession this year and the zloty is seen outperforming
its peers in the longer run. But this week the unit was pulled
back by expectations of a big corporate payout.
The leu was this week's top performer after the IMF approved
a second tranche of its loan late on Monday. Some dealers
speculated Romania's central bank intervened this week to prop
it up, signalling it was ready to use IMF cash to defend the
unit.
Markets were also watching for central bank minutes in
Poland and debt tenders in Hungary <HUISSUE> later in the day.
Hungary will auction 25 billion forints worth of three-year
bonds, 12 billion forints worth of five-year and 10 billion
forints worth of 10-year bonds.
Debt markets were quiet, with Polish bonds stabilising after
Wednesday's successful tenders and finance ministry comments
that it plans to issue foreign debt in the fourth quarter and
ease pressure on domestic debt [].
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.128 25,152 +0.1% +6.47%
Polish zloty <EURPLN=> 4.176 4.183 +0.17% -1.46%
Hungarian forint <EURHUF=> 270.95 271.08 +0.05% -2.73%
Croatian kuna <EURHRK=> 7.288 7.263 -0.34% +1.06%
Romanian leu <EURRON=> 4.211 4.226 +0.36% -4.67%
Serbian dinar <EURRSD=> 93.16 93.077 -0.09% -3.95%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -16 basis points to 193bps over bmk*
7-yr T-bond CZ7YT=RR -3 basis points to +177bps over bmk*
10-yr T-bond CZ10YT=RR +1 basis points to +171bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +6 basis points to +386bps over bmk*
5-yr T-bond PL5YT=RR +5 basis points to +333bps over bmk*
10-yr T-bond PL10YT=RR +5 basis points to +288bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -9 basis points to +590bps over bmk*
5-yr T-bond HU5YT=RR -9 basis points to +513bps over bmk*
10-yr T-bond HU10YT=RR -1 basis points to +437bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1233 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Marius Zaharia;
Editing by Victoria Main)
