May 13, 2019 / 1:59 PM / 5 months ago

CEE MARKETS-Crown falls as Czech inflation slows, KGHM leads stocks decline

    * Trade war fears, Czech CPI drop weigh on currencies
    * Copper producer KGHM leads Warsaw stocks fall on trade war
    * Polish, Romanian central banks seen holding fire
    * Q1 GDP growth data seen showing slowdown except for

 (Adds price changes, new analyst comments, copper producer KGHM
stocks fall)
    By Sandor Peto
    BUDAPEST, May 13 (Reuters) - The crown touched 6-week lows
against the euro on Monday as Czech inflation unexpectedly
slowed, while the U.S.-China trade war helped drive down stocks
and government bond yields in Central Europe.
    April Czech annual inflation dropped to 2.8%. 
    The crown traded at 25.77 against the euro at 1304
GMT, down 0.1 percent, even though it was off 25.79 reached
after the inflation figures.
    The Czech central bank (CNB) increased its interest rates
for the eighth time in two years early this month after
inflation rose well above its 2% target.
    Monday's CPI figures add to expectations that the bank is
likely to pause its rate hikes for the rest of 2019 but could
move either way later.
    If Britain quits the European Union without a deal or the
euro zone economy slows, the next move may be a cut, Erste group
analyst Jiri Polansky said in a note, adding that improving euro
zone economic data could lead to a hike.
    Goldman Sachs analysts said a hike remained the likely next
move. "We continue to think that implied rates for 2020 are too
low," they said in a note.
    The zloty also eased. The relatively volatile
forint reversed its early fall as the euro also
strengthened against the greenback.
    Warsaw led a decline in regional equity indexes.
    Its almost 1.5 percent fall was mainly driven by copper
producer KGHM, which shed 3.8 percent.
    The head of its Chilean peer Antofagasta said the
U.S.-China trade war had slashed the price of copper,
which registered its fourth consecutive weekly fall last
    The trade conflict between the world's two biggest economies
has cut risk appetite in global markets, weighing on stock
prices and inflation and interest rate expectations.
    Luxury car makers Daimler AG and BMW
are putting their investments in Hungary on hold as the industry
struggles with lower demand and the threat of higher U.S. auto
tariffs on car imports from Europe, German media reported.

    U.S. President Donald Trump was due to meet visiting
Hungarian Prime Minister Viktor Orban later on Monday.
    First-quarter economic output figures due from the region's
main economies later this week are likely to show growth still
outpaced the euro zone though at a slower rate except for
Hungary, where analysts project steady 5.1% annual growth.  
    The Polish and Romanian central banks are expected to keep
their interest rates on hold on Wednesday.
    The leu bucked the weaker regional trend, trading
at 4.761 versus the euro, after Romanian figures showed a
surprise rise in annual inflation to 4.1% in April, the region's
highest level.
            CEE       SNAPSHOT   AT                         
            MARKETS             1504 CET            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2019
 Czech      <EURCZK=   25.7700   25.7400    -0.12%    -0.24%
 crown      >                                       
 Hungary    <EURHUF=  323.5500  323.7500    +0.06%    -0.76%
 forint     >                                       
 Polish     <EURPLN=    4.3030    4.2989    -0.10%    -0.31%
 zloty      >                                       
 Romanian   <EURRON=    4.7610    4.7615    +0.01%    -2.25%
 leu        >                                       
 Croatian   <EURHRK=    7.4065    7.4055    -0.01%    +0.05%
 kuna       >                                       
 Serbian    <EURRSD=  117.8500  117.9500    +0.08%    +0.38%
 dinar      >                                       
 Note:      calculated from               1800 CET          
                      Latest    Previous  Daily     Change
                                close     change    in 2019
 Prague                1043.02  1049.640    -0.63%    +5.72%
 Budapest             40625.91  41068.21    -1.08%    +3.80%
 Warsaw                2160.27   2191.91    -1.44%    -5.11%
 Bucharest             8194.95   8304.58    -1.32%   +10.99%
 Ljubljana  <.SBITOP    864.52    868.67    -0.48%    +7.49%
 Zagreb                1838.18   1840.78    -0.14%    +5.11%
 Belgrade   <.BELEX1    732.55    731.71    +0.11%    -3.83%
 Sofia                  569.33    571.54    -0.39%    -4.23%
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
 Czech                                              spread
   2-year   <CZ2YT=R    1.6300   -0.1500   +226bps    -15bps
   5-year   <CZ5YT=R    1.7440   -0.0510   +222bps     -5bps
   10-year  <CZ10YT=    1.8900    0.0300   +195bps     +4bps
   2-year   <PL2YT=R    1.6460   -0.0170   +227bps     -2bps
   5-year   <PL5YT=R    2.2380   -0.0370   +271bps     -3bps
   10-year  <PL10YT=    2.8580   -0.0450   +292bps     -4bps
            FORWARD   RATE      AGREEMEN                    
                      3x6       6x9       9x12      3M
 Czech Rep                2.24      2.25      2.23      2.20
 Hungary                  0.34      0.49      0.65      0.16
 Poland                   1.74      1.75      1.77      1.72
 Note: FRA  are for ask prices                              
0 : 0
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