* Polish, Hungarian bonds extend winning streak
* Hungary tax vote gives small boost to forint
* Austrian cbank gov says E.Europe meltdown panic over
* Romania seen cutting rates 50 bps on Tuesday
(updates prices, adds Hungarian tax vote)
By Kuba Jaworowski and Marius Zaharia
WARSAW/BUCHAREST, June 29 (Reuters) - Polish bonds firmed on
Monday on easing supply concerns, while Hungarian papers
extended gains even as central Europe's currencies held in
ranges on investor caution.
The forint <EURHUF=> ticked up from 276.3 to 275.95 minutes
after Hungary approved tax changes to the 2010 budget, vital for
Budapest to secure more of its $25.1 billion in foreign aid.
"No doubt, the vote has removed a negative risk factor," one
Budapest-based dealer said.
Austria's central bank chief said over the weekend that
panic over a possible central European meltdown was over.
In Latvia, news the European Commission would disburse a
further 1.2 billion euros to the Baltic state, which avoided a
devaluation of its lat currency this month [], also
rallied sentiment to keep markets buoyed.
But dealers said investors have largely moved to the
sidelines to the start the week, keeping currencies stuck in
ranges they traded at last week.
"Currencies are bound to remain stable, rather than enter a
rally, although newsflow is positive," one dealer in Bucharest
said. "Now the story comparing the CEE with other emerging
markets is dominating and doesn't look good."
Central European currencies have been moving in tighter
ranges since global sentiment started to improve in April, but
worries over financial stability have directed investment flows
more to Latin America than to central and eastern Europe.
By 1500 GMT, the Hungarian forint <EURHUF=> and the Polish
zloty <EURPLN=> firmed 0.2 percent, while the Czech crown
<EURCZK=> lost 0.1 percent from the previous domestic close.
Romania's leu <EURRON=> inched stronger ahead of Tuesday's
central bank meeting, when analysts expect a 50 basis points cut
to 9 percent.
Hungarian bonds extended gains from Friday after end of week
comments from the debt agency AKK that it would raise offered
amounts at bond tenders. [] <HUISSUE>
"Visibly there is (higher) demand for the papers now," one
dealer in Budapest said.
Poland published its July debt plans on Monday, similar to
June issuance as expected by the market []. Yields
continued to fall since Friday, when the finance ministry said
it would not offer long bonds in the next two months.
WORST OVER
On Saturday, Austrian central bank Governor and ECB
governing council Member Ewald Nowotny said there was no longer
a perception of a special problem for Austria due to the huge
exposure of Vienna based banks in Eastern Europe. []
Helped by pledges of external aid for those countries that
may need it, currencies are 3-9 percent stronger since the end
of February, when worries over central Europe's growth,
financing and banks pummelled the region.
The economic downturn is expected to worsen loan performance
in central Europe, while weak currencies have raised costs for
thousands of households that borrowed in foreign currencies.
Those hurdles could bring new lenders in the region, who
would use the opportunity to snap up cheaper assets from Western
rivals or homegrown players facing bad debt, market players say.
[]
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26 25.983 -0.07% +2.9%
Polish zloty <EURPLN=> 4.498 4.507 +0.2% -8.51%
Hungarian forint <EURHUF=> 275.95 276.55 +0.22% -4.49%
Croatian kuna <EURHRK=> 7.275 7.265 -0.14% +1.24%
Romanian leu <EURRON=> 4.213 4.215 +0.05% -4.71%
Serbian dinar <EURRSD=> 94.05 93.616 -0.46% -4.86%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -5 basis points to 153bps over bmk*
4-yr T-bond CZ4YT=RR -6 basis points to +172bps over bmk*
8-yr T-bond CZ8YT=RR +11 basis points to +298bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -8 basis points to +382bps over bmk*
5-yr T-bond PL5YT=RR -5 basis points to +330bps over bmk*
10-yr T-bond PL10YT=RR -11 basis points to +293bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -11 basis points to +812bps over bmk*
5-yr T-bond HU5YT=RR -1 basis points to +745bps over bmk*
10-yr T-bond HU10YT=RR -5 basis points to +653bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1800 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaux; Writing by Kuba Jaworowski and
Marius Zaharia; Editing by Victoria Main)
