UPDATE 1-CEE MARKETS-Romanian assets slide as government tables tax plans

(Recasts with Romanian markets, Czech rate decision, updates markets)

* Big tax changes weigh on Romanian stocks, leu currency

* New Romanian government awaits parliamentary approval

* Czech central bank keeps rates unchanged as expected

* Czech crown firms half a percent

BUCHAREST/PRAGUE, June 29 (Reuters) - The Romanian leu dropped half a percent and stocks plunged on Thursday as the new government tabled a tax plan before heading for a confidence vote in Parliament it was widely expected to win. The ruling Social Democrats plan to replace a flat 16 percent corporate tax on profit with a multi-levelled tax on turnover and introduce "a solidarity contribution" next year, a revised governing programme showed. They also plan to liquidate a mandatory private pension system that was introduced in 2008 to supplement ailing state pensions. Romania's economy grew at the fastest rate in central Europe in the first quarter, but political turmoil and policy uncertainty have weighed on its markets in the past weeks. The new tax and private pension plans, which had not been discussed with businesses beforehand, brought additional unpredictability to edgy investors on Thursday. underperforming its regional peers, while the Romanian stock market index was down 2 percent. Mihai Tudose was named prime minister on Monday after the ruling parties sacked former premier Sorin Grindeanu on June 21 for failing to implement an ambitious programme that helped the coalition parties win a December election. A majority of ministers from the ousted cabinet feature in the new government lineup. It is likely to receive approval given the comfortable parliamentary majority held by the ruling Social Democrat Party (PSD) and its junior partner ALDE. The confidence vote is expected later on Thursday. Politics is expected to impact the Romanian currency in the longer term, an analyst said. "Even if this (vote today) brings an end to the government crisis for now, politics remain a factor of uncertainty in Romania," Commerzbank said in a note. "The case of the previous government illustrated just how quickly Dragnea can withdraw his support." Romania's strong economic growth, however, could support the leu, Commerzbank added. "Focus is now likely to increasingly rest on the positive fundamental environment, and we see appreciation potential for RON," it added. The Czech central bank kept its key interest rate unchanged near zero on Thursday as expected. The bank said it was likely to raise interest rates for the first time in almost a decade in the third quarter, in line with its current economic outlook. Several of the bank's board members, including Governor Jiri Rusnok, have said previously that the tightening might come after the third quarter if the crown currency appreciates significantly. On Thursday, Rusnok said the crown exchange remained a significant source of uncertainty, after the central bank freed it in April from a currency cap that kept it weak. The crown was trading half a percent stronger at 1240 GMT on Thursday. A dealer said markets, which have been pricing in later rate hikes, may start taking the central bank rhetoric more seriously "but (it is) probably not necessary to push EURCZK too low...when the CNB may change the timing (of rate hikes)."



Latest Previo Daily Change


bid close change in


Czech crown 26.170 26.302 +0.51 3.20% 0 5 % Hungary 310.11 309.74 -0.12% -0.42% forint 00 00 Polish zloty 4.2475 4.2325 -0.35% 3.68% Romanian leu 4.5731 4.5502 -0.50% -0.83% Croatian 7.4135 7.4115 -0.03% 1.91%


Serbian 120.56 120.96 +0.33 2.31% dinar 00 00 % Note: daily calculated previo close 1800 change from us at CET


Latest Previo Daily Change


close change in


Prague 979.04 977.22 +0.19 +6.23 % % Budapest 35333. 35455. -0.35% +10.4 34 97 1% Warsaw 2327.6 2327.6 +0.01 +19.5 8 8 % 0% Bucharest 8020.3 8168.3 -1.81% +13.2 7 7 0% Ljubljana 796.20 794.79 +0.18 +10.9 % 5% Zagreb 1878.2 1877.7 +0.03 -5.85% 0 1 % Belgrade 714.10 709.83 +0.60 -0.46%


Sofia 704.17 702.21 +0.28 +20.0 % 8%


Yield Yield Spread Daily (bid) change vs change Bund in Czech spread


2-year 0.064 0.015 +064b -1bps


5-year 0.033 0.085 +027b +2bps


10-year 0.982 0.086 +054b +0bps

ps Poland

2-year 1.929 0.029 +250b +1bps


5-year 2.704 0.071 +294b +0bps


10-year 3.351 0.066 +291b -2bps



interb ank

Czech Rep <PR 0.34 0.43 0.54 0


Hungary <BU 0.2 0.25 0.31 0.15


Poland <WI 1.747 1.8 1.85 1.73


Note: FRA are for ask quotes prices ********************************************************* *****

(Writing by Marton Dunai/Krisztina Than, editing by Toby Davis)