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CEE MARKETS-Warsaw stocks rise, led by banks, as earnings improve
February 9, 2017 / 11:08 AM / in 8 months

CEE MARKETS-Warsaw stocks rise, led by banks, as earnings improve

* Warsaw equities index at highest in more than 15 months
    * Bank Pekao reports 13 percent annual rise in Q4 net
    * Expectations of c. bank rate hike helps banks-analyst
    * Romanian bond auction draws strong demand

 (Adds Romanian auction and central bank comments, dealer
comment on PKN rise)
    By Sandor Peto and Bartosz Chmielewski
    BUDAPEST/WARSAW, Feb 9 (Reuters) - Banks stocks pushed
Warsaw's blue-chip stock index to its highest in 16
months on Thursday after fourth-quarter earnings from Bank Pekao
beat forecasts.
    The index rose 2.1 percent by 1349 GMT, outperforming
Central Europe's other main indices as well as the main Western
European stock markets.
    Pekao rose 2.6 percent to a seven-month high after reporting
a 13-percent increase in annual net profits. Shares of Poland's
biggest bank, PKO BP, rose 2.3 percent.
    Gains by oil stocks after crude oil prices rose also
helped Warsaw's index.
    PKN Orlen surged by 5.5 percent, also buoyed by a
correction of a slump three weeks ago after state pipeline
operator bought a 4.9 percent stake in PKN, said Adam Kolsut,
broker of DM BZ WBK.   
    Poland's fourth-largest bank, mBank reported higher
than-expected earnings on Wednesday, even though profits
dropped, reflecting the impact of a bank tax imposed in 2016.
    Poland's government has pursued less business-friendly
policies than its predecessor, economists say, causing the stock
exchange index to fall to seven-year lows last year.
    Pekao's solid earnings report further improves sentiment
after a rise in banking shares in the past few weeks due to
expectations for a rise in the central bank's (NBP) record-low
interest rates, said Haitong analyst Kamil Stolarski.
    "Yesterday, NBP once again left interest rates unchanged,
but tightening is a very hot topic among market players, and the
majority expect that rates will be raised in 2018, with obvious
benefit for Polish banks," he added. 
    The biggest Czech bank, Komercni Banka, also reported
bigger-than-expected in earnings. Hungarian banks surged as well
 last year.
    Poland's zloty was steady at 4.3115 to the euro,
after a rebound to a four-month high at 4.2734 early this week,
followed by profit-taking.
    Romania's leu extended early losses and was down
0.2 percent at 4.4965 after central bank governor Mugur Isarescu
said negative inflation and higher production costs were denting
competitiveness.
    Isarescu said that, although the bank did not make exchange
rate forecasts, he did not see "much room for the exchange rate
to appreciate".
    The leu has sharply rebounded from 7-month lows touched at
4.554 a week ago amid mass street protests over a decree that
would have decriminalised some graft offences. The government
withdrew the decree on Sunday..
    Strong demand at Romania's 3-year government bond auction on
Thursday also indicated that investors have calmed down, though
the average yield rose from an auction four weeks ago.
 
    Romanian Justice Minister Florin Iordache resigned on
Thursday, as expected, over the graft decree debacle.   
              CEE        SNAPS   AT  1449          
              MARKETS    HOT    CET           
                         CURRENCIES                
                         Lates  Previ  Daily  Chang
                         t      ous           e
                         bid    close  chang  in
                                       e      2017
 Czech crown             27.02  27.03   +0.0  -0.06
                            30     35     4%      %
 Hungary                 308.8  309.1   +0.1  0.01%
 forint                    000    750     2%  
 Polish                  4.311  4.312   +0.0  2.14%
 zloty                       5      4     2%  
 Romanian                4.496  4.488  -0.18  0.86%
 leu                         5      6      %  
 Croatian                7.467  7.461  -0.08  1.17%
 kuna                        5      2      %  
 Serbian                 123.8  123.8   +0.0  -0.41
 dinar                     600    600     0%      %
 Note: daily  calculate  previ  close  1800        
 change       d from     ous    at     CET    
                         STOCK                     
                         S                    
                         Lates  Previ  Daily  Chang
                         t      ous           e
                                close  chang  in
                                       e      2017
 Prague                  955.1  955.2  -0.01   +3.6
                             1      1      %     3%
 Budapest                32831  32595   +0.7   +2.5
                           .90    .92     2%     9%
 Warsaw                  2127.  2083.   +2.1   +9.2
                            38     65     0%     1%
 Bucharest               7632.  7605.   +0.3   +7.7
                            82     17     6%     3%
 Ljubljana               750.2  754.6  -0.58   +4.5
                             4      4      %     5%
 Zagreb                  2174.  2184.  -0.46   +9.0
                            55     58      %     1%
 Belgrade     <.BELEX15  705.2  699.6   +0.8  -1.69
              >              6      3     0%      %
 Sofia                   600.6  603.6  -0.51   +2.4
                             0      5      %     2%
                         BONDS                     
                         Yield  Yield  Sprea  Daily
                                       d      
                         (bid)  chang  vs     chang
                                e      Bund   e in
 Czech                                        sprea
 Republic                                     d
   2-year     <CZ2YT=RR  -0.57  0.047   +020   +4bp
              >              8           bps      s
   5-year     <CZ5YT=RR  0.063  0.014   +051   +1bp
              >                          bps      s
   10-year    <CZ10YT=R  0.485  -0.00   +019  -1bps
              R>                    6    bps  
 Poland                                            
   2-year     <PL2YT=RR  2.178  -0.02   +296  -4bps
              >                     6    bps  
   5-year     <PL5YT=RR   3.12  -0.00   +356  -1bps
              >                     3    bps  
   10-year    <PL10YT=R  3.768  -0.00   +347   +0bp
              R>                    2    bps      s
              FORWARD    RATE   AGREEMENT          
                         3x6    6x9    9x12   3M
                                              inter
                                              bank
 Czech Rep            <   0.26   0.24   0.28      0
              PRIBOR=>                        
 Hungary              <   0.37   0.49   0.61   0.25
              BUBOR=>                         
 Poland               <   1.76   1.79   1.87   1.73
              WIBOR=>                         
 Note: FRA    are for                              
 quotes       ask                             
              prices                          
 **************************************************
 ************
 
 (Additional reporting by Anna Koper; Editing by Gareth Jones)

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