* Czech deficit to be less than target - finance minister * Poland to cut pension fund transfers to plug budget - PM * Hungary pays higher yield on bonds, CHF/HUF near record high
(Adds Poland pension reform, Czech deficit, updates markets)
By Marton Dunai and Dagmara Leszkowicz
BUDAPEST/WARSAW, Dec 30 (Reuters) - The Czech crown was the top performing currency in emerging Europe on the last full trading day of the year, punctuating a strong performance in 2010 that reflected confidence in the republic's fiscal and economic position.
The crown added a third of a percent by 1529 GMT on Thursday as the Finance Minister said the government was on course to meet its 2010 deficit target and that it could even come in slightly below the government's aim of 163 billion crowns.
The Polish zloty held steady near a one-month high helped by state-owned BGK bank converting euros into the local currency, but Polish bonds weakened a shade on the longer end after the government unveiled a pension reform proposal.
Polish Prime Minister Donald Tusk unveiled plans to cut employees' contributions to mandatory private pension funds to 2.3 percent of their monthly salaries from 7.3 percent at present to help shore up budget finances.
BGK bank is authorised to convert euros for zlotys on behalf of the finance ministry, which needs to exchange European Union funds. The bank's presence in the market also has a psychological impact in supporting the zloty, dealers said.
"BGK is likely to rule in the market until the end of the year," said one Warsaw-based dealer. "The local support level is 3.96."
Meanwhile, the Hungarian forint slipped 0.2 percent on the day against the euro as the country's assets continued to feel the effects of two recent ratings downgrades.
The forint also suffered against the global safe haven Swiss franc, whose strength pushed the CHF/HUF pair near the all-time high of 226.36 in intraday trading. The strength of the franc, the main funding unit for Hungary's foreign currency loans, hurts the hundreds of thousands of Hungarian households who have taken out franc-denominated debt.
The Romanian leu was flat.
HUNGARIAN YIELDS RISE
The Czech crown is the top gainer in the region this year, having added 4.4 percent, followed by the zloty, which is also backed by strong economic fundamentals and which has gained 3.5 percent in 2010.
The forint and the leu have slipped 3.2 percent and 1.1 percent, respectively, in 2010 amid political tension and uncertainty over their fiscal outlooks.
Data from the National Bank of Hungary showed the country's current account surplus stood at 477 million euros in the third quarter, more than analysts' forecasts.
Hungary was forced to pay yields up to a quarter of a percent above recent levels as it sold 45 billion forints worth of bonds at the year's last auction, as planned.
Poland said it would sell 12-18 billion zlotys worth of treasury bills at 12 auctions in the first quarter.
Both countries' bond markets were quiet at the end of the year, although longer-maturity Polish bond yields rose about 3 basis points after the pension reform announcement. --------------------------MARKET SNAPSHOT-------------------- Currency Latest Previous Local Local
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