CEE MARKETS 2-Polish bonds, zloty down on budget news

                                
 * Budget news hits Polish markets, debt supply eyed
                                
 * Other CEE assets rise with peers on G20 pledges
                                
 
  (Adds details, recasts with updated prices)
                                
 By Jason Hovet
                                
 PRAGUE, Sept 7 (Reuters) - Polish bonds weakened and the
zloty slipped on Monday after weekend news the country's budget
deficit was expected to double next year, while other central
European assets got a lift from G20 pledges.
                                
 Other currencies were a shade stronger and the region's
stock markets gained around 2 percent, with the exception of
Prague, as riskier assets found support from G20 promises to
keep economic stimuli going. [ID:nL7580935] [ID:nL7572731] 
                                
 In Poland, Finance Minister Jacek Rostowski told a newspaper
in an interview released after markets closed on Friday that the
government's 2010 draft budget envisages a shortfall of 52.2
billion zlotys, double this year's plan. [ID:nL496584]
                                
 The news, along with expectations that the central bank was
at the end of its monetary easing cycle, pushed bond yields up
5-7 basis points along the curve.
                                
 "Prices fell slightly after the announcement on the deficit.
But I don't see a panic sell-off now," said Pawel Bialczynski, a
dealer at BRE bank in Warsaw.
                                
 Markets were also waiting on details due at midday on the
expected supply at a 5-year bond tender on Wednesday.
                                
 On currency markets, the zloty <EURPLN=> lost 0.7 percent by
0941 GMT to bid at 4.116 to the euro.
                                
 Central European governments have been battling an economic
slowdown that has raised joblessness and cut state revenue.
Poland, the region's largest economy, has so far avoided the
economic contraction facing its export-heavy neighbours.
                                
 The country had spent years cutting back its core public
sector shortfall to less than the 3 percent of gross domestic
product ceiling needed to join the euro. 
                                
 The figure given by Rostowski is just over 4 percent of 2008
nominal GDP, which has mostly ended hopes Poland can join the
euro zone by 2012.
                                
 "No point in talking about ERM2/EMU dates now," Cheuvreux
economist Simon Quijano-Evans said in a morning note.
                                
 "Implications for markets (are) the privatisation programme
will continue at full speed, meaning more equity supply ... and
also (more) bond supply ahead and thus upside pressure on yields
as we see more central bank comments on removing the easing
bias."
                                
 Hungarian markets were quiet on Monday, but the forint
<EURHUF=> led gains with a 0.2 percent rise over Friday's
domestic close, as country officials were set to hold a press
conference at 1300 GMT on the end of the latest IMF review.  The
economic downturn pushed Romania and Hungary to secure
International Monetary Fund aid packages this year and last year
respectively. 
                                
 In other trade the Romanian leu <EURRON=> and the Czech
crown <EURCZK=> were steady, with the latter ignoring
better-than-expected July foreign trade data, showing a 12.25
billion crown surplus. [ID:nL7161509]
                                
 
--------------------------MARKET SNAPSHOT--------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2009 
Czech crown      <EURCZK=>   25.477   25.472  -0.02%    +5.01%
Polish zloty     <EURPLN=>    4.116    4.088  -0.68%    -0.02%
Hungarian forint <EURHUF=>  271.97   272.5    +0.19%    -3.1%
Croatian kuna    <EURHRK=>    7.329    7.335  +0.08%    +0.49%
Romanian leu     <EURRON=>    4.243    4.245  +0.05%    -5.39%
Serbian dinar    <EURRSD=>   93.05    93.07   +0.02%    -3.84%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR    -9 basis points to  137bps over bmk*
4-yr T-bond   CZ4YT=RR   +3 basis points to  +158bps over bmk*
#VALUE!
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR   +6 basis points to  +403bps over bmk*
5-yr T-bond   PL5YT=RR   +7 basis points to  +337bps over bmk*
10-yr T-bond PL10YT=RR   +7 basis points to  +291bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR   +2 basis points to  +646bps over bmk*
5-yr T-bond   HU5YT=RR   +1 basis points to  +584bps over bmk*
10-yr T-bond   HU10YT=RR  0 basis points to  +499bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1143 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 Stephen Nisbet)