* Forint, stocks, bonds hammered
* Suspension also hits other CEE assets
* Hungary's c.bank meets on interest rates
* Romania tenders 750 mln lei in one-year t-bills.
(Updates with stock, debt markets open, fresh quotes)
By Marius Zaharia
BUCHAREST, July 19 (Reuters) - Hungary's forint, stocks and
bonds fell on Monday after funding talks between the country's
government and international lenders ended prematurely over the
weekend, impacting other central European assets.
At 0746 GMT, the forint <EURHUF=> traded 2.4 percent down
from Friday's close at 288.55 per euro, levels last seen in
early June when officials of the then newly appointed
centre-right government spooked markets by comparing Hungary's
fiscal problems with the Greek debt crisis [].
Hungarian bond yields rose 20-25 basis points across the
curve on Monday.
Elsewhere, the Polish zloty <EURPLN=> was down 0.4 percent,
trading at 4.124 per euro, significantly off overnight lows of
4.1540. Romania's leu <EURRON=> was 0.2 percent weaker, while
the Czech crown <EURCZK=> was virtually flat.
"Ultimately, the Hungarian government will have no choice
but to reach an agreement with the EU/IMF," Simon Quijano-Evans
of Cheuvreux said in a note.
He said the reaction in central Europe's currencies,
especially the zloty, was overdone.
Hungary faces no immediate pressure on state finances and
its 2010 position looks safe, but economists agree it needs to
keep the deal led by the International Monetary Fund on track as
an external anchor of credibility.
Although Hungary's public debt burden is lower than that of
some euro zone countries, at 80 percent of gross domestic
product it is the highest in central Europe and foreign
borrowing triggered a 2008 crisis that forced it to call in
international help.
While currency falls against the euro have helped Hungary
tame a recession and Poland avid one, weakening to the Swiss
franc has caused big pain for these countries as a large chunk
of loans taken in booming years were denominated in francs.
"Any continuation in this direction will just result in
further loan defaults and hardship for many - HUF is now around
38 percent weaker versus the (Swiss franc) than the 155 levels
at which a large part of mortgage loans were taken," Quijano
Evans said.
On Monday, the forint traded at 212.67 against the Swiss
franc <CHFHUF=>, roughly 4 percent weaker from Friday, while the
zloty was quoted 0.6 percent weaker at 3.0362 <CHFPLN=>.
Budapest stocks <> were also at six-week lows, having
fallen around 4 percent and leading regional losses.
INTERVENTION RISKS
Hungary's central bank (NBH) holds a meeting on interest
rates later on Monday and it is still seen keeping borrowing
costs on hold at 5.25 percent, although its tone may turn more
hawkish. [].
Analysts said the bank may intervene in currency markets if
the forint's fall accelerates.
"We are looking to sell EUR/HUF on exaggerated moves (target
around 295)," UniCredit said in a note. "In case of escalated
moves we would not fully rule out some form of central bank
intervention -- rate hike, etc."
"Central banks also still have plenty of ammo to intervene,
something we may see happening soon," Cheuvreux's Quijano-Evans
said.
Investors are also eyeing Romania's tender to sell 750
million lei in one-year treasury bills later on Monday.
The finance ministry has either rejected all bids or cut
tenders across maturities since early May, when investors began
demanding higher yields in response to the government's growing
difficulties in securing vital aid tranches from the IMF.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.44 25.432 -0.03% +3.45%
Polish zloty <EURPLN=> 4.124 4.106 -0.44% -0.48%
Hungarian forint <EURHUF=> 288.55 281.54 -2.43% -6.31%
Croatian kuna <EURHRK=> 7.225 7.225 0% +1.17%
Romanian leu <EURRON=> 4.274 4.265 -0.21% -0.86%
Serbian dinar <EURRSD=> 104.6 104.61 +0.01% -8.34%
All data taken from Reuters at 0846 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Marius Zaharia,
Editing by Ruth Pitchford, John Stonestreet)
