* Orban crisis tax comments hit forint, bonds; stx recover
* Sentiment also hit by Irish, Portuguese yield spreads
* Romania, Hungary seen most vulnerable
(Adds Hungarian bonds, quote)
By Marius Zaharia
BUCHAREST, Nov 11 (Reuters) - Hungary's forint plunged to a
three-week low and bonds fell on Thursday, breaking through a
key resistance level after Prime Minister Viktor Orban said a
continuation of the "crisis tax" regime beyond 2012 was needed.
Markets fear the taxes on companies from the banking or
energy sectors could limit their ability to invest or force them
to seek investment opportunities outside Hungary, thus impeding
its frail economic recovery.
The forint's move was exacerbated by thin trade caused by
market holidays in Poland and the U.S. and some dealers said it
could reverse soon as the next key level at 277 looked hard to
break.
Hungarian government bond yields rose 10-15 basis points
across the curve and the average yield at a tender to sell
12-month T-bills rose 12 basis points. []
"Local factors such as the tax plans are stronger now... and
the dollar does not seem to be able to weaken either," a trader
in Budapest said.
At 1149 GMT, the forint <EURHUF=> traded 0.8 percent down on
the day at 276.41 per euro, after having hit 277.04, its lowest
since Oct. 20.
"Losses accelerated after we breached 275," said a currency
dealer in Budapest. "It did not even pause at 276 although the
277 level seems to be holding it up for now."
The unit was unmoved by data showing Hungary's annual
inflation rose more than markets had expected to 4.2 percent in
October from September's 3.8 percent. []
Record yield spreads in debt-ridden Ireland and Portugal
kept appetite for central European assets low, with investors
fearing the negative sentiment in the euro zone could spread
towards more fiscally fragile states such as Romania or Hungary.
Romania's leu <EURRON=> and the Czech crown <EURCZK=> were
little changed or a touch lower from Wednesday's close.
The Polish zloty <EURPLN=> was half-a-percent weaker on the
day, after it hit its highest level in more than six months at
3.8715 in the previous session.
STOCKS RECOVER
Hungary on Wednesday confirmed that it plans to keep its
recently introduced windfall taxes on certain sectors of the
economy in place to a reduced extent until 2014, beyond a
previous plan to phase them out by 2012. []
Budapest shares <> posted their steepest daily fall on
Wednesday since late May on the news. []
On Thursday, Orban said Hungary will negotiate in 2012 with
banks, retail, telecom and energy companies about new taxes
[].
While the Thursday comments renewed worries over Hungary's
long term outlook and pushed the forint through key technical
levels, stocks found strength to recover some of the previous
session losses to trade up 0.6 percent.
Market players are waiting for a news conference in which
central bankers will express their view on the Fidesz
government's 2011 budget.
"It is likely that the NBH (central bank) will provide a
critical assessment of the budget plans which could lead to HUF
vulnerability," BNP Paribas said in a morning note, adding its
long zloty/forint trade could find support in such comments.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.601 24.611 +0.04% +6.98%
Polish zloty <EURPLN=> 3.911 3.89 -0.54% +4.93%
Hungarian forint <EURHUF=> 276.41 274.12 -0.83% -2.19%
Croatian kuna <EURHRK=> 7.371 7.337 -0.46% -0.84%
Romanian leu <EURRON=> 4.283 4.276 -0.16% -1.06%
Serbian dinar <EURRSD=> 107.1 106.96 -0.13% -10.48%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +4 basis points to 79bps over bmk*
7-yr T-bond CZ7YT=RR +6 basis points to +98bps over bmk*
10-yr T-bond CZ9YT=RR +2 basis points to +109bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +17 basis points to +580bps over bmk*
5-yr T-bond HU5YT=RR +62 basis points to +544bps over bmk*
10-yr T-bond HU10YT=RR +14 basis points to +484bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1249 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 []
Spot FX rates
Eastern Europe spot FX <EEFX=> Middle East spot FX <MEFX=>
Asia spot FX <ASIAFX=> Latin America spot FX <LATAMFX=>
Other news and reports
World central bank news [] Economic Data Guide <ECONGUIDE>
Official rates [] Emerging Diary []
Top events [] Diaries [] Diaries Index []
(Reporting by Reuters bureaus, writing by Marius Zaharia,
editing by Ron Askew)
