May 14, 2019 / 2:22 PM / a year ago

CEE MARKETS-Stocks lag global rebound, hurt by U.S. tariff risk

    * Stocks mostly lag rebound in Asia, Western Europe
    * Fear of trade war, economic slowdown still hurts
    * OTP leads fall, fails to stay above 200-day average

    By Sandor Peto
    BUDAPEST, May 14 (Reuters) - Budapest stocks fell on Tuesday
as fears of a global trade war persisted even though Asian and
Western European equities regained some ground after a sell-off.
    Slightly more optimistic comments from U.S. and Chinese
officials on trade talks reduced the tension, but new U.S.
tariffs on car imports from Europe remained a risk.
    Vehicle production has been a key component of economic
growth in Central Europe, along with a rise in domestic
consumption as wages surge in the region.
    The region's stock indexes underperformed London and
Frankfurt. Worst was Budapest, where the main index
 was down 1.3% by 1330 GMT.
    It dropped through the 40,000-point level, setting a 3-month
low and approaching its 200-day moving average of 39,180 points.
    It has been retreating from record highs in the past three
weeks as the U.S.-China trade war and worries over economic
growth in Europe and elsewhere have weighed on equities.
    OTP, the region's biggest independent lender, fell
more than 3% on Tuesday.
    Worries over the trade talks brought the share down below
its 200-day moving average, which it exceeded on Friday after
the bank reported a strong rise in first-quarter earnings.
    Hungarian first-quarter economic output figures due on
Wednesday are expected to show steady annual growth at a robust
    But Monday's media reports that German luxury car makers
Daimler AG and BMW might be putting their
investments in Hungary on hold have fuelled concerns over the
region's auto industry.
    The companies are struggling to deal with lower demand and
the threat of higher auto tariffs from the United States, the
daily Handelsblatt reported.
    "Auto industry has a big part in the GDP ... worries over it
definitely play a role in the fall of stocks," one
Budapest-based trader said.
    Warsaw's and Bucharest's stock indexes were
almost flat, while Prague rose 0.5%, rebounding from a
3-and-1/2-month low.
    Regional currencies were mostly slightly in the red against
the euro, except for the crown which drifted off
Monday's 6-week lows.
    Czech, Polish and Romanian first-quarter economic output
data due on Wednesday are expected to show some slowdown in
growth to rates which are still stronger than in euro zone
    The Polish and the Romanian central banks are expected to
keep interest rates on hold at their meetings on Wednesday, even
though they may comment on April's inflation rise.
    "The probability that (Polish) inflation may touch 3% (vs
the bank's 1.5-3.5 percent target) at the end of the year has
visibly increased," Erste analysts said in a note.
            CEE       SNAPSHOT   AT                         
            MARKETS             1530 CET            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2019
 Czech      <EURCZK=   25.7530   25.7730    +0.08%    -0.18%
 crown      >                                       
 Hungary    <EURHUF=  324.3700  324.1500    -0.07%    -1.01%
 forint     >                                       
 Polish     <EURPLN=    4.3065    4.3062    -0.01%    -0.39%
 zloty      >                                       
 Romanian   <EURRON=    4.7615    4.7620    +0.01%    -2.26%
 leu        >                                       
 Croatian   <EURHRK=    7.4100    7.4063    -0.05%    +0.00%
 kuna       >                                       
 Serbian    <EURRSD=  117.8500  117.8700    +0.02%    +0.38%
 dinar      >                                       
 Note:      calculated from               1800 CET          
                      Latest    Previous  Daily     Change
                                close     change    in 2019
 Prague                1049.44  1043.870    +0.53%    +6.37%
 Budapest             39995.21  40537.85    -1.34%    +2.19%
 Warsaw                2174.32   2172.97    +0.06%    -4.49%
 Bucharest             8150.55   8164.57    -0.17%   +10.39%
 Ljubljana  <.SBITOP    862.94    865.06    -0.25%    +7.30%
 Zagreb                1838.11   1840.47    -0.13%    +5.11%
 Belgrade   <.BELEX1    735.08    732.55    +0.35%    -3.49%
 Sofia                  564.66    567.25    -0.46%    -5.01%
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
 Czech                                              spread
   2-year   <CZ2YT=R    1.6180   -0.1580   +226bps    -16bps
   5-year   <CZ5YT=R    1.7180   -0.0460   +221bps     -4bps
   10-year  <CZ10YT=    1.8490   -0.0010   +192bps     +0bps
   2-year   <PL2YT=R    1.6500    0.0120   +229bps     +2bps
   5-year   <PL5YT=R    2.2190   -0.0080   +271bps     +0bps
   10-year  <PL10YT=    2.8560    0.0100   +293bps     +1bps
            FORWARD   RATE      AGREEMEN                    
                      3x6       6x9       9x12      3M
 Czech Rep                2.23      2.23      2.22      2.20
 Hungary                  0.37      0.54      0.70      0.16
 Poland                   1.74      1.74      1.75      1.72
 Note: FRA  are for ask prices                              
0 : 0
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