* Forint falls after PM crisis tax comments, euro zone woes
* Hungary cbank: govt steps to boost CPI, reforms missing
* Zloty falls in thin holiday trade, Poland seen strongest
(Adds Hungary cbank, updates markets)
By Marius Zaharia and Marton Dunai
BUCHAREST/BUDAPEST, Nov 11 (Reuters) - Emerging European
markets steadied on Thursday afternoon after Hungary's forint
hit a three-week low on government comments of a "crisis tax"
regime extending beyond 2012.
Investors feared the taxes on various sectors could limit
companies' ability to invest, impeding recovery.
Prime Minister Viktor Orban said that the government would
devise a new tax regime after 2012 but it will not return to the
status quo seen before the crisis taxes. []
The central bank warned that the budget measures might boost
inflation, which the bank would fight, and the budget lacked
long-term spending-side reforms. []
By 1433 GMT, the forint <EURHUF=> was down 0.8 percent, off
a three-week low it had hit earlier. The Polish zloty <EURPLN=>
also fell 0.8 percent but stayed near a six-month high.
Romania's leu <EURRON=> and the Czech crown <EURCZK=> were
little changed or a touch lower from Wednesday's close.
The currencies' move was irregular as Polish and U.S.
markets stayed closed, dealers said, adding that the fall of the
forint stopped at the key level at 277.
"I think the central bank will keep rates unchanged in
November, but it could be a very tight vote," a Budapest-based
dealer said.
Analysts expect that the flow of easy money coming from the
U.S. could skip emerging Europe for now as it is less appealing
than other regions, though investors may at some point favour
economies with good fundamentals such as Poland. []
Hungarian government bond yields rose 10-15 basis points
across the curve. []
"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."
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.
Hungary's stocks continued to underperform the region on
Thursday, with the blue chip <> index extending Wednesday's
steep losses by another 2.3 percent. Czech stocks <> were 1.4
percent lower, while Polish stocks <> eased 1.5 percent.
Serbia's central bank took markets by surprise on Thursday
hiking its benchmark rate by 100 basis points to 10.5 percent,
in a bid to tame inflation.[]
The size of the move also reflected the pressure which the
dinar -- which ended the day flat -- had been under since
confidence-sapping news that the government and the IMF failed
to reach agreement last week on the next tranche of financial
support, Barclays said in a note.
Further dinar depreciation following the government's
announcement it does not plan to continue borrowing from the IMF
and the dinar's 12 percent fall versus the euro during 2010 had
raised the risk that of currency depreciation contributing to a
further rise in inflation, Barclays said.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.615 24.611 -0.02% +6.92%
Polish zloty <EURPLN=> 3.922 3.89 -0.82% +4.64%
Hungarian forint <EURHUF=> 276.21 274.12 -0.76% -2.12%
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=> 107.01 106.96 -0.05% -10.4%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +4 basis points to 65bps over bmk*
7-yr T-bond CZ7YT=RR +4 basis points to +96bps over bmk*
10-yr T-bond CZ9YT=RR +2 basis points to +98bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +10 basis points to +575bps over bmk*
5-yr T-bond HU5YT=RR +27 basis points to +553bps over bmk*
10-yr T-bond HU10YT=RR +16 basis points to +477bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1533 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaus, writing by Marius Zaharia,
editing by Ron Askew)
