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CEE MARKETS-Some assets rebound after retreat on profit-taking
May 24, 2017 / 9:23 AM / in 7 months

CEE MARKETS-Some assets rebound after retreat on profit-taking

    * Some currencies and stocks regain ground after retreat
    * Crown retreats slightly, central bank comments could
support it
    * Bucharest stocks hit highest level since early
2008

    By Sandor Peto and Robert Muller
    BUDAPEST/PRAGUE, May 24 (Reuters) - Some Central European
currencies and stocks rebounded on Wednesday after a retreat in
the past two sessions due to profit-taking.
    China's credit rating downgrade by Moody's did not have an
impact and with a lack of major international market moving
factors, investors are watching technical issues and comments
from central bankers in the region, market participants said.
    The forint and the zloty continued to
hover near 308.5 and 4.2 against the euro at 0852 GMT,
psychological levels around which they have been moving for
weeks.
    With investors taking profit on regional assets in the
second successive session, the forint eased 0.2 percent to
309.05. The zloty gained 0.1 percent to 4.199.
    Both the Hungarian and Polish central banks have issued
dovish signals in recent weeks as they do not look worried over
inflation, which retreated in the region last month after fast
rebound from anaemic levels since mid-2016.
    Hungarian central bank deputy Governor Marton Nagy told
Reuters late on Tuesday that the bank's record low base rate
could remain unchanged until 2019 or even longer. 
    While a pick-up in economic growth backs currencies across
the region, the Czech crown could get more support
from central bank rhetoric than its regional peers, analysts
said.
    It gave up ground on Wednesday, easing 0.2 percent against
the euro, while at 26.494 it still traded on the strong side of
the 26.5 line.
    Czech central bankers have given signals in the past weeks
that the odds on an interest rate hike rise if the crown does
not strengthen.
    The head of Erste Group Bank's Czech asset management
company said the Czech central bank (CNB) could be the first in
the region to start lifting interest rates.
    CNB board member Vojtech Benda told Reuters that low
interest rates boost housing prices into a spiral the bank will
need to slow.
    Other comments from Benda, that third-quarter economic data
will be key to the CNB's policy, also support the crown, CSOB
analysts said in a note.
    "Our outlook for inflation and growth this year is somewhat
less optimistic and therefore we don't expect higher rates this
year," they said.
    "It is clear, however, that a vision of such scenario bodes
well for the crown and it helps to preserve the good mood of
recent weeks," they added. 
    Bucharest's stock index hit a new 9-year high.
Sentiment in the bourse have been lifted by an initial public
offering and listing by Digi Communications this
month.
    Budapest's index shed 0.5 percent, continuing to
retreat from a record high hit on Monday.
    
                CEE MARKETS  SNAPSH   AT  1052 CET         
                             OT                      
                             CURRENCIES                    
                             Latest  Previo  Daily   Change
                                     us              
                             bid     close   change  in
                                                     2017
 Czech crown                 26.494  26.452  -0.16%   1.94%
                                  0       0          
 Hungary                     309.05  308.55  -0.16%  -0.07%
 forint                          00      50          
 Polish zloty                4.1990  4.2014   +0.06   4.88%
                                                  %  
 Romanian leu                4.5520  4.5554   +0.07  -0.37%
                                                  %  
 Croatian kuna               7.4280  7.4305   +0.03   1.71%
                                                  %  
 Serbian dinar               122.75  122.88   +0.11   0.49%
                                 00      50       %  
 Note: daily    calculated   previo  close   1800          
 change         from         us      at      CET     
                             STOCKS                        
                             Latest  Previo  Daily   Change
                                     us              
                                     close   change  in
                                                     2017
 Prague                      1008.0  1007.9   +0.01   +9.37
                                  1       1       %       %
 Budapest                    34493.  34730.  -0.68%   +7.78
                                 48      94               %
 Warsaw                      2302.2  2307.8  -0.24%   +18.1
                                  9       4              9%
 Bucharest                   8557.0  8508.2   +0.57   +20.7
                                  3       8       %      8%
 Ljubljana                   788.51  791.34  -0.36%   +9.88
                                                          %
 Zagreb                      1850.2  1850.8  -0.03%  -7.25%
                                  7       6          
 Belgrade                    738.43  739.12  -0.09%   +2.94
                                                          %
 Sofia                       660.74  655.00   +0.88   +12.6
                                                  %      7%
                             BONDS                         
                             Yield   Yield   Spread  Daily
                             (bid)   change  vs      change
                                             Bund    in
 Czech                                               spread
 Republic                                            
   2-year                    -0.098   0.083   +055b   +9bps
                                                 ps  
   5-year                    -0.019   0.003   +032b   +1bps
                                                 ps  
   10-year                    0.828  -0.019   +043b   -1bps
                                                 ps  
 Poland                                                    
   2-year                     1.949  -0.008   +260b   +0bps
                                                 ps  
   5-year                     2.774   0.016   +312b   +3bps
                                                 ps  
   10-year                    3.349   0.016   +295b   +2bps
                                                 ps  
                FORWARD      RATE    AGREEMENT             
                             3x6     6x9     9x12    3M
                                                     interb
                                                     ank
 Czech Rep              <PR    0.35    0.43    0.51       0
                IBOR=>                               
 Hungary                <BU    0.18    0.21    0.29    0.15
                BOR=>                                
 Poland                 <WI    1.77    1.79    1.83    1.73
                BOR=>                                
 Note: FRA      are for ask                                
 quotes         prices                               
 

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