* Possible financial tax extension hits Budapest equities
* Forint holds steady, leu leads FX gains
* Zloty tests double-bottom level, break possible
(Recasts with Budapest stocks)
PRAGUE, Nov 10 (Reuters) - Budapest banking stocks fell
around 4 percent on Wednesday, dragging the index to its lowest
since the start of October on news the Hungarian government may
extend a crisis tax on the sector.
The Budapest index <> fell 2.4 percent and was the
biggest loser among central European stocks that were already
pressured by a pullback from risk following weak Chinese import
data. Other emerging European bourses lost up to 1 percent.
Hungary's government is factoring in an annual 93.5 billion
forints ($470 million) from a special tax on the financial
sector in 2012-14, according to a document submitted to
parliament.
This extends an earlier announced date and is half of what
the government plans to collect this year and next from this
bank tax. []
The IMF, the central bank and the European Union have all
criticised the crisis taxes, and while the government's drive to
cut the budget deficit has been seen as positive, the measures
used have also unnerved investors. []
"The changes within the domestic regulation... have become
usual on a daily basis, which is negative, in our view, mainly
if it comes to Hungarian assets' general attractiveness," said
Budapest broker Equilor, adding it could lead to further
underperformance of Hungarian assets.
"Therefore, the negative effect in the trading could reach
even a higher extent as interest in domestic assets may
deteriorate further."
Budapest stocks have risen 10 percent this year, less than
the 13.5 percent gain in Prague <> and 24 percent rise in
Warsaw <>.
CURRENCIES HOLD STEADY
The forint <EURHUF=> trailed gains in the region, but was
steady. It bid down 0.1 percent at 273.64 per euro by 1045 GMT.
The Romanian leu <EURRON=> showed little reaction to
inflation data showing a rise to 7.9 percent, in line with
expectations and driven by tax increases implemented as part of
international aid conditions.
Dealers say the leu should not react to gross domestic
product data due later this week as markets are focusing mainly
on risks to the International Monetary Fund deal.[]
The leu rose 0.2 percent to 4.276 to the euro, a one-week
high. The Czech crown <EURCZK=> was stuck in the range that it
has clung to since October. The Polish zloty <EURPLN=> added 0.1
percent to bid at 3.893 per euro.
The zloty was near a more than six-month high and tested the
3.890 resistance level that formed a double-bottom hit over the
past month, and which it briefly broke below on Tuesday.
"If sustained, this move paves the way for the cross for
further zloty gains towards the next key support level of 3.8230
(per euro)," Danske Bank said in a note.
Analysts expect the zloty to rise the most among emerging
European peers in the coming months, supported by expectations
of a rate hike this year and better growth prospects.
A second round of quantitative easing (QE2) by U.S.
policymakers is pushing money flows into emerging markets as
investors chase higher growth and yields.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.571 24.569 -0.01% +7.11%
Polish zloty <EURPLN=> 3.893 3.897 +0.1% +5.42%
Hungarian forint <EURHUF=> 273.64 273.45 -0.07% -1.2%
Croatian kuna <EURHRK=> 7.36 7.356 -0.05% -0.69%
Romanian leu <EURRON=> 4.276 4.285 +0.21% -0.9%
Serbian dinar <EURRSD=> 107.03 107.02 -0.01% -10.42%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -2 basis points to 73bps over bmk*
7-yr T-bond CZ7YT=RR +1 basis points to +87bps over bmk*
10-yr T-bond CZ9YT=RR -2 basis points to +102bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -1 basis points to +382bps over bmk*
5-yr T-bond PL5YT=RR -3 basis points to +363bps over bmk*
10-yr T-bond PL10YT=RR -1 basis points to +316bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1146 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 Catherine Evans/Ruth Pitchford)
