March 3, 2017 / 11:31 AM / 6 months ago

CEE MARKETS-Currencies, stocks ease ahead of Yellen speech

    * U.S. rate hike expectations weigh on CEE stocks,
currencies
    * OTP Bank earnings mixed, but lifts 2017 profit guidance
    * OTP stock eases slightly in sour global mood
    * Currencies ease on technicals, staying in recent ranges

    By Sandor Peto and Lidia Kelly
    BUDAPEST/WARSAW, March 3 (Reuters) - Central European stocks
and currencies eased for a second session in a row on Friday on
the back of growing market expectations of a U.S. interest rate
hike in March.
    Asian and Western European stocks also followed Wall Street
lower ahead of a speech by Fed Chair Janet Yellen, as the
prospect of higher U.S. rates turned investors towards bonds.
    Warsaw's bluechip equities index fell 0.7 percent,
mainly driven by banks, though the bourse's bank stock index
 hovered near the 21-month highs reached late last month.
    Banks have been a key driver of the gains in regional stock
indices to multi-year highs, part of a global rally, in past
weeks, fuelled by expectations of a U.S. spending stimulus and
higher rates in the U.S., which may lift bank earnings.
    Earnings reports published by Central European banks in the
past weeks have also been promising.
    The latest to report was Central Europe's biggest
independent bank, Hungary's biggest lender OTP, which
posted lower-than-expected fourth-quarter earnings but said
annual profit in 2016 more than tripled to just over 200 billion
forints. The outlook for 2017 was even brighter, it said.

    But with investors unwinding stock positions, OTP's share
price fell 0.7 percent, while Budapest' stock index eased 0.1
percent and is off the record highs set last month.
    Higher risk provisions trimmed OTP's fourth-quarter profits,
while the bank lifted its profit guidance for 2017.
    "I do not think that the positive international stock market
trend is reversed," Equilor Brokerage analyst Zoltan Varga said.
"If the good mood returns next week, OTP could rise again."
    Central Europe's main currencies also eased against the
euro, with the zloty shedding 0.3 percent and the forint
 and the leu easing 0.2 percent.
    Friday's weakening still leaves them within the past few
weeks' ranges.
    "We saw an attempt to firm the zloty (earlier this week),
but it eventually failed to get out of the consolidation zone,"
said Konrad Ryczko, analyst at BOS Brokerage House, in a note.
    "As a consequences, a small correction is visible and a
return to an equilibrium level with a wider range of
fluctuations," he added.
    The Czech crown was steady in its implied exchange rates in
forwards contracts, after the statistics office
published a breakdown of fourth-quarter economic growth figures.

              CEE        SNAPSHOT   AT  1054 CET            
              MARKETS                                 
                         CURRENCIES                         
                         Latest    Previous  Daily    Change
                         bid       close     change   in
                                                      2017
 Czech crown              27.0200   27.0250   +0.02%  -0.05%
 Hungary                 309.9000  309.2350   -0.21%  -0.35%
 forint                                               
 Polish                    4.3050    4.2919   -0.30%   2.30%
 zloty                                                
 Romanian                  4.5310    4.5228   -0.18%   0.09%
 leu                                                  
 Croatian                  7.4150    7.4200   +0.07%   1.89%
 kuna                                                 
 Serbian                 123.4700  123.6600   +0.15%  -0.10%
 dinar                                                
 Note: daily  calculate  previous  close at  1800           
 change       d from                         CET      
                         STOCKS                             
                         Latest    Previous  Daily    Change
                                   close     change   in
                                                      2017
 Prague                    973.12    977.16   -0.41%   +5.59
                                                           %
 Budapest                33126.42  33155.19   -0.09%   +3.51
                                                           %
 Warsaw                   2237.80   2254.51   -0.74%   +14.8
                                                          8%
 Bucharest                7981.19   7973.00   +0.10%   +12.6
                                                          5%
 Ljubljana                 782.51    789.90   -0.94%   +9.05
                                                           %
 Zagreb                   2222.52   2221.05   +0.07%   +11.4
                                                          1%
 Belgrade     <.BELEX15    718.42    720.37   -0.27%   +0.15
              >                                            %
 Sofia                     613.07    612.21   +0.14%   +4.54
                                                           %
                         BONDS                              
                         Yield     Yield     Spread   Daily
                         (bid)     change    vs Bund  change
                                                      in
 Czech                                                spread
 Republic                                             
   2-year     <CZ2YT=RR    -0.623    -0.048   +022bp   -4bps
              >                                    s  
   5-year     <CZ5YT=RR     0.021    -0.003   +051bp   +1bps
              >                                    s  
   10-year    <CZ10YT=R     0.614     -0.02   +031bp   -1bps
              R>                                   s  
 Poland                                                     
   2-year     <PL2YT=RR     2.175    -0.013   +302bp   +0bps
              >                                    s  
   5-year     <PL5YT=RR     3.049    -0.015   +353bp   +0bps
              >                                    s  
   10-year    <PL10YT=R     3.737    -0.005   +344bp   +1bps
              R>                                   s  
              FORWARD    RATE      AGREEMENT                
                         3x6       6x9       9x12     3M
                                                      interb
                                                      ank
 Czech Rep            <      0.27       0.3     0.36       0
              PRIBOR=>                                
 Hungary              <       0.3      0.45     0.59       0
              BUBOR=>                                 
 Poland               <     1.765     1.785     1.87    1.73
              WIBOR=>                                 
 Note: FRA    are for                                       
 quotes       ask                                     
              prices                                  
 ***********************************************************
 ***
 
 (Reporting by Sandor Peto; editing by Richard Lough)
  
 
 

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