* Czech crown, bonds, await parliament fiscal vote
* Czech cbank keeps rates flat as expected
* Romanian no-confidence vote against govt seen failing
* Hungarian bond yields fall 3-7 bps after debt tenders
(adds Czech rate decision, Hungary bond auctions, leu rise)
By Marius Zaharia
BUCHAREST, Sept 24 (Reuters) - The Czech crown lagged peers
on Thursday as rates remained flat as expected and uncertainty
over a key fiscal vote in Prague mounted, while the Romanian leu
hit a five-week high ahead of a no-confidence vote against the
government.
In Hungary, expectations for further monetary easing,
including a 50 basis point cut next week [] have
helped the country sell more bonds than previously planned at
its three auctions on Thursday [].
In reaction, Hungarian bonds yields fell 3-7 basis points.
In Prague, the parliament is due to vote on austerity
measures aimed at cutting the 2010 budget gap from an expected
7.5 percent of gross domestic product to 5.2 percent.
[].
The crown had edged up after an agreement among parties
looked close on Wednesday, but on Thursday policymakers clashed
over the fiscal package, making its approval doubtful
[]. The interim government reiterated this would
trigger its resignation.
"This risky scenario could push politicians to act
responsibly," Komercni Banka said in a note. "We expect some
kind of market relief reaction in this case, otherwise there is
a risk of bonds sell-off."
The Czech central bank kept interest rates on hold at a
record low of 1.25 percent and markets were waiting for comments
by the central bank at 1200 GMT.
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 1124 GMT, the Romanian leu <EURRON=> was 0.4 percent up,
the Polish zloty <EURPLN=> and the Hungarian forint <EURHUF=>
were 0.3 percent stronger, while the crown <EURCZK=> was flat.
"The leu rally continues as there were some stop losses from
offshore players following recent gains," one dealer said.
The zloty failed to react on Moody's comments that the
agency was comfortable with Poland's rating outlook short-term,
but it may consider cutting it if no fiscal reforms will be
taken after next year's elections [].
FRAGILE RECOVERY
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.
In other markets, Polish bonds stabilised 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=> 25.143 25.152 +0.04% +6.4%
Polish zloty <EURPLN=> 4.172 4.183 +0.26% -1.37%
Hungarian forint <EURHUF=> 270.28 271.08 +0.3% -2.49%
Croatian kuna <EURHRK=> 7.262 7.263 +0.01% +1.42%
Romanian leu <EURRON=> 4.209 4.226 +0.4% -4.62%
Serbian dinar <EURRSD=> 93.177 93.077 -0.11% -3.97%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -19 basis points to 190bps 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 +7 basis points to +387bps over bmk*
5-yr T-bond PL5YT=RR +6 basis points to +334bps 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 -16 basis points to +583bps over bmk*
5-yr T-bond HU5YT=RR -3 basis points to +510bps over bmk*
10-yr T-bond HU10YT=RR -4 basis points to +434bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1424 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 Andy Bruce)
