* FX, stocks turn negative after EU deficit data
* Intervention risk remains as strong FX impact weighed
* Hungarian bond auction smooth, rally stalls
* Election finale, cbank watched in Hungary
(Updates with EU deficits, Hungary auction, poll)
By Jason Hovet
PRAGUE, April 22 (Reuters) - Central European currencies
dipped slightly on Thursday after EU revealed Greece had a much
larger budget deficit last year than expected, while a Hungarian
bond auction drew solid demand but yields were a touch up from
previous market lows.
The cost of insuring Greek debt hit a record high and the
spread on Greek bonds versus benchmark German widened to a fresh
12-year high after European Union data showed the country's
budget deficit was higher than first thought. []
Central European stocks dropped into negative territory and
currencies gave up small morning gains as the data hit other
European assets and investors stayed cautious on debt-racked
Greece's woes. The EU data also mostly confirmed previously
reported budget deficits for the region. []
Emerging EU assets -- backed by the region's better growth
outlook and lower debt loads -- have stayed mostly immune to the
problems of the debt-laden euro zone periphery, with bond yields
dropping to multi-year lows this month.
Hungary smoothly sold 55 billion forints in bonds on
Thursday, following up Czech and Polish bond tenders that saw
bids twice the offer at Wednesday auctions. []
Yields at the Hungarian auction dropped from April 8 sales,
but were higher than market rates on Wednesday, dealers said.
"I think this is the end of the rally for now," a Budapest
bond dealer said.
Romania, where bond markets like in Hungary have been
supported by falling interest rates, was also due to sell bonds.
Hungary's central bank is expected to cut interest rates by
another 25 basis points on Monday, a monthly Reuters poll of
analysts showed on Thursday. []
The Hungarian forint <EURHUF=> edged 0.1 percent lower, the
Polish zloty <EURPLN=> was just off a one-week high, and the
Czech crown <EURCZK=> steadied below the 25.300 per euro level.
Romania's leu <EURRON=> was down 0.2 percent at 4.14 per euro.
HUNGARY ELECTION, CBANK
Currencies have fallen back into tight ranges this month
after jumping in value against the euro this year, which was led
by the zloty's more than 6 percent gain.
The Polish central bank surprised markets on April 9 with
the first market intervention in 10 years to knock the zloty off
16-month peaks, and cooling markets since.
Analysts have said the move was likely just to slow the fast
appreciation of the zloty, not to protect a certain level.
But policymakers in Poland and Romania have become worried
what stronger currencies could do to exports. The International
Monetary Fund raised its growth outlook for central and eastern
Europe to 2.8 percent on Wednesday. []
Hungary's forint is expected to rise further after Sunday's
election run-off, which could also prompt the incoming
pro-growth Fidesz government and the central bank to try to stem
currency gains to help the economy. []
Fidesz was close to winning the two-thirds parliamentary
majority needed to push through vital reforms, something markets
have already cheered. []
"Maybe if Fidesz fails to win two-thirds, that might upset
investors a little," a dealer said.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.276 25.279 +0.01% +4.12%
Polish zloty <EURPLN=> 3.869 3.865 -0.1% +6.07%
Hungarian forint <EURHUF=> 264.08 263.87 -0.08% +2.37%
Croatian kuna <EURHRK=> 7.252 7.251 -0.01% +0.79%
Romanian leu <EURRON=> 4.141 4.133 -0.19% +2.33%
Serbian dinar <EURRSD=> 99.05 99.24 +0.19% -3.2%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -24 basis points to 69bps over bmk*
7-yr T-bond CZ7YT=RR +5 basis points to +66bps over bmk*
10-yr T-bond CZ10YT=RR +3 basis points to +62bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +3 basis points to +428bps over bmk*
5-yr T-bond HU5YT=RR 0 basis points to +366bps over bmk*
10-yr T-bond HU10YT=RR +6 basis points to +337bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1231 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 Toby Chopra)
