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CEE MARKETS-Bonds, fx ease on ECB; Warsaw stocks highest since April
December 8, 2016 / 4:05 PM / 10 months ago

CEE MARKETS-Bonds, fx ease on ECB; Warsaw stocks highest since April

* ECB decisions cause some uncertainty, jitters in fx, bonds
    * Polish 10-yr yield rises, Hungary's flat after strong
auction
    * Polish stocks rise on sale of Unicredit's local unit
    * Serbia keeps rates on hold as expected

 (Recasts with ECB decisions, market reactions)
    By Sandor Peto and Jakub Iglewski
    BUDAPEST/WARSAW, Dec 8 (Reuters) - Central European
currencies and long-dated government bonds eased on Thursday
after the European Central Bank said it would cut its monthly
asset purchases from April but extend the bond buying until the
end of 2017.
    ECB bond purchases in the euro zone have also stoked demand
for assets in the EU's eastern wing.
    The ECB said it would cut monthly purchases to 60 billion
euros from the current 80 billion euros. 
    The decisions caused jitters in markets as investors had
expected purchases to stay at 80 billion but only for six more
months.
    The yield on Polish 10-year bonds jumped 7 basis points to
3.61 percent. Hungary's corresponding yield was flat on the day,
but rose 6 basis points from the 3.3 percent average yield set
at an auction earlier on Thursday, which drew robust demand.
    Czech yields rose and their curve steepened.
    More dovish ECB decisions could have made it more difficult
for the Czech central bank to keep its plan to abandon its cap -
which keeps the crown weaker than 27 against the euro
- in around the middle of 2017. 
    "So they can still deliver," one dealer said.
    The crown is likely to surge through the cap after it is
removed and if ECB policy is loose it would strengthen even more
against the euro.
    The ECB's moves created some uncertainty, however. Some
traders interpreted the bank's decisions as further easing.
Others said the ECB was preparing to end its stimulus.
    The zloty eased 0.3 percent to 4.4425 against the
euro by 1455 GMT. The forint hit a four-month low past
315 before rebounding to 313.96, still down 0.1 percent from
Wednesday.
    Piotr Poplawski, senior economist at ING BSK in Warsaw
changed his view after ECB head Mario Draghi said at a news
conference after the bank's policy meeting that "there is no
tapering" in the asset purchases.
    "In that case, I think euro/dollar will move further down
and euro/zloty is likely to follow and fall towards 4.38-4.40,"
Poplawski said.
    Warsaw's blue-chip equities index gained 1.7
percent to its highest since April after state-controlled firms
announced they would buy Italian UniCredit's Polish
bank unit and as Germany's stock index jumped.
    UniCredit will sell a 33 percent stake in Poland's second
biggest bank Pekao to two Polish state entities
including insurer PZU for $2.6 billion. 
    Meanwhile Alior, a bank controlled by PZU, walked
away from buying the Polish unit of Austria's Raiffeisen bank.
 
    The stocks of Alior, which earlier bought BPH, another
Polish bank, jumped 10 percent on relief that it will now not
need to issue new shares to finance buying the Raiffeisen unit.
    PZU gained almost 4 percent.
    The dinar firmed slightly, after Serbia's central
bank kept rates on hold as expected. 
    
           CEE        SNAPSHOT    AT  1555 CET           
           MARKETS                                 
                      CURRENCIES                         
                      Latest     Previou  Daily    Change
                                 s                 
                      bid        close    change   in
                                                   2016
 Czech                  27.0310  27.0345   +0.01%  -0.12%
 crown                                             
 Hungary               313.9600  313.640   -0.10%   0.22%
 forint                                0           
 Polish                  4.4525   4.4389   -0.31%  -4.37%
 zloty                                             
 Romanian                4.5000   4.4985   -0.03%   0.42%
 leu                                               
 Croatian                7.5350   7.5375   +0.03%   1.38%
 kuna                                              
 Serbian               123.2300  123.380   +0.12%  -1.43%
 dinar                                 0           
 Note:     calculate  previous   close    1800           
 daily     d from                at       CET      
 change                                            
                      STOCKS                             
                      Latest     Previou  Daily    Change
                                 s                 
                                 close    change   in
                                                   2016
 Prague                  899.70   894.24   +0.61%  -5.92%
 Budapest              30412.01  30152.0   +0.86%   +27.1
                                       1               4%
 Warsaw                 1921.50  1889.51   +1.69%   +3.35
                                                        %
 Buchares               6864.83  6874.31   -0.14%  -1.99%
 t                                                 
 Ljubljan                703.87   708.65   -0.67%   +1.11
 a                                                      %
 Zagreb                 1991.17  1988.47   +0.14%   +17.8
                                                       5%
 Belgrade  <.BELEX15     717.08   714.78   +0.32%   +11.3
           >                                           3%
 Sofia                   579.97   577.02   +0.51%   +25.8
                                                       3%
                      BONDS                              
                      Yield      Yield    Spread   Daily
                      (bid)      change   vs Bund  change
                                                   in
 Czech                                             spread
 Republic                                          
   2-year  <CZ2YT=RR     -0.632    0.093   +006bp   +11bp
           >                                    s       s
   5-year  <CZ5YT=RR     -0.133    0.009   +023bp   +1bps
           >                                    s  
           <CZ10YT=R      0.582    0.019   +015bp   -7bps
 10-year   R>                                   s  
 Poland                                                  
   2-year  <PL2YT=RR      1.964    0.032   +266bp   +5bps
           >                                    s  
   5-year  <PL5YT=RR      2.879    0.025   +324bp   +2bps
           >                                    s  
           <PL10YT=R      3.631    0.092   +320bp   +1bps
 10-year   R>                                   s  
           FORWARD    RATE       AGREEMENT               
                      3x6        6x9      9x12     3M
                                                   interb
                                                   ank
 Czech             <       0.29     0.27     0.26       0
 Rep       PRIBOR=>                                
 Hungary           <       0.37     0.41      0.5    0.41
           BUBOR=>                                 
 Poland            <      1.755    1.775    1.805    1.73
           WIBOR=>                                 
 Note:     are for                                       
 FRA       ask                                     
 quotes    prices                                  
 ********************************************************
 ******
 
    

 (Additional reporting from Radu Marinas in Bucharest, Jason
Hovet in Prague and Bartosz Chmielweski in Warsaw; Editing by
Gareth Jones and Susan Fenton)

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