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CEE MARKETS-FX, stocks jump, PMIs signal robust growth
March 1, 2017 / 10:29 AM / 8 months ago

CEE MARKETS-FX, stocks jump, PMIs signal robust growth

    * Hungary PMI at record high, Czech at almost 6-year high
    * Stock indices rebound after profit-taking slump
    * Currencies firm vs euro, which weakens versus dollar

    By Sandor Peto
    BUDAPEST, March 1 (Reuters) - Central European currencies
and stocks surged and government bonds eased on Wednesday after
Czech, Hungarian and Polish manufacturing indices showed robust
economic growth.
    Hungary's Purchasing Managers' Index jumped to a record-high
of 59.5 in February from 57 in January, far above the 50 line
that separates economic growth from contraction.
    The Czech figure, at 57.6, was the highest in almost six
years, while the Polish index slowed somewhat to 54.2, but still
indicated growth.
    Central Europe's main stock indices rose, led by a 2 percent
jump in Budapest's main index.
    The rebound came after a week of profit-taking, which had
knocked regional indices down following a rally that lasted
several weeks, tracking a rise in global equities markets due to
expectations for economic stimulus in the United States.
    While U.S. President Donald Trump did not provide new
details on those plans in a speech on Tuesday, the dollar still
firmed against the euro.
    "Central European currencies, which have been trading on low
turnover, did not track the euro's weakening against the
dollar," one Budapest-based dealer said.
    The forint firmed 0.2 percent to 307.78 against
the euro by 0921 GMT, approaching 4-month highs. The leu
 also firmed 0.2 percent and the zloty
crossed the 4.3 psychological line, gaining 0.3 percent.
    "The forint (debt instruments) still provide higher interest
rates than elsewhere (in Europe)," the dealer said.
    Hungarian and Polish government bond yields rose by about 4
basis points, tracking a rise in U.S. Treasuries yields after
New York Fed President William Dudley said the case for
tightening monetary policy "has become a lot more compelling".
    Polish 10-year papers traded at a yield of 3.84 percent and
Hungary's corresponding bonds at 3.45 percent, compared with
2.42 percent in the U.S. and 1.68 percent in Spain.
    A rise in inflation in Central Europe and the prospect of
economic pick-up have not worried the region's central banks so
far and they are unlikely to start to lift interest rates this
year.
    Hungary's central bank reiterated its dovish policy bias on
Tuesday. Dealers said the surge in the PMI did not change
expectations about monetary policy in Hungary.
    The dollar's firming contributed to the rebound in regional
stock indices, improving the revenue prospects of some listed
firms.
    "The stronger dollar benefits (oil group) MOL or (drug
maker) Richter," Erste analysts said in a note
released in Budapest.
    The Czech crown remained steady after the PMI figures in its
euro exchange rates implied in forward deals.

    
              CEE        SNAPS   AT  1021          
              MARKETS    HOT    CET           
                         CURRENCIES                
                         Lates  Previ  Daily  Chang
                         t      ous           e
                         bid    close  chang  in
                                       e      2017
 Czech crown             27.02  27.02   +0.0  -0.05
                            00     40     1%      %
 Hungary                 307.7  308.2   +0.1  0.34%
 forint                    800    450     5%  
 Polish                  4.299  4.311   +0.2  2.44%
 zloty                       0      0     8%  
 Romanian                4.518  4.526   +0.1  0.37%
 leu                         5      4     7%  
 Croatian                7.428  7.435   +0.1  1.70%
 kuna                        5      8     0%  
 Serbian                 123.6  123.7   +0.0  -0.25
 dinar                     600    400     6%      %
 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                  960.7  953.9   +0.7   +4.2
                             5      2     2%     5%
 Budapest                32697  32061   +1.9   +2.1
                           .28    .33     8%     7%
 Warsaw                  2228.  2191.   +1.6   +14.
                            28     25     9%    39%
 Bucharest               8016.  7969.   +0.5   +13.
                            21     94     8%    14%
 Ljubljana               788.1  791.4  -0.42   +9.8
                             4      4      %     3%
 Zagreb                  2212.  2221.  -0.38   +10.
                            49     02      %    91%
 Belgrade     <.BELEX15  717.2  718.7  -0.22  -0.02
              >              1      7      %      %
 Sofia                   605.1  611.1  -0.97   +3.2
                             8      2      %     0%
                         BONDS                     
                         Yield  Yield  Sprea  Daily
                                       d      
                         (bid)  chang  vs     chang
                                e      Bund   e in
 Czech                                        sprea
 Republic                                     d
   2-year     <CZ2YT=RR  -0.49  0.004   +039  -1bps
              >              6           bps  
   5-year     <CZ5YT=RR  0.134  0.043   +067   +1bp
              >                          bps      s
   10-year    <CZ10YT=R  0.634  0.016   +039  -2bps
              R>                         bps  
 Poland                                            
   2-year     <PL2YT=RR  2.229  0.003   +311  -1bps
              >                          bps  
   5-year     <PL5YT=RR  3.167  0.053   +371   +2bp
              >                          bps      s
   10-year    <PL10YT=R  3.848  0.042   +361   +1bp
              R>                         bps      s
              FORWARD    RATE   AGREEMENT          
                         3x6    6x9    9x12   3M
                                              inter
                                              bank
 Czech Rep            <   0.26   0.29   0.33      0
              PRIBOR=>                        
 Hungary              <   0.31    0.5   0.61   0.23
              BUBOR=>                         
 Poland               <  1.775  1.795  1.875   1.73
              WIBOR=>                         
 Note: FRA    are for                              
 quotes       ask                             
              prices                          
 **************************************************
 ************
 
 (Reporting by Sandor Peto; Editing by Gareth Jones)
  
 
 

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