October 13, 2016 / 9:11 AM / 10 months ago

CEE MARKETS-Shares fall, Hungarian bond auction draws demand

* Serbian central bank holds fire, dinar steadies
    * Stocks ease as Chinese data ups risk aversion
    * Hungary's bond auction draws good demand, yields drop
    * Czech 2-year bond yield dips below Bund equivalent

 (Adds fall of Polish bank stocks)
    By Sandor Peto
    BUDAPEST, Oct 13 (Reuters) - Central European stocks fell
and government bonds firmed on Thursday as weak Chinese trade
figures sapped investors' appetite for risk. 
    The dinar was steady at 123.15 against the euro at
1500 GMT, after the Serbian central bank kept its 4 percent
benchmark interest rate on hold, citing uncertainty over
monetary policy in the United States and the euro zone.
 
    Romania's leu also steadied, although it is seen
remaining under pressure over worries about a draft law on the
conversion of Swiss franc mortgages.
    Warsaw's blue-chip stock index shed 1.9 percent.
Polish stocks extended their losses after financial regulator
KNF said banks faced bigger-than-expected costs from planned
legislation to force them to return "excessive" currency
conversion spreads to clients. 
    Shares in Pekao fell more than 5 percent as a
90-day lock-up by UniCredit on its 40 percent stake in
the Polish lender has ended, traders said.  
    A recent rise in yields ensured robust demand at a Hungarian
government bond auction, with Hungary selling 86 billion forints
($316.41 million) worth of bonds, twice as much as planned.
  
    The bonds have become attractive after a 15 to 20 basis
point rise in their yields in recent weeks. Yields dropped by 2
to 3 basis points on Thursday, with the three-year paper trading
at 1.36 percent. 
    Hungarian bonds are expected to receive additional support
from a central bank measure which will limit funds in its
three-month deposit facility from late this month.
    The same measure, which is aimed at boosting liquidity in
interbank markets, may weigh on the forint.
    Hungary's currency eased 0.2 percent against the euro, but
is still near 17-month highs reached last week, buoyed by a
Standard & Poor's credit rating upgrade last month.  
    Czech government bonds, which have ultra-low yields, joined
the regional trend, with the two-year benchmark 
trading near record-low yields. It dropped 2 basis points to
-0.68 percent, below corresponding Bund yields, with the crown
 stuck at the central bank's cap of 27 per euro.
    Central bank governor Jiri Rusnok reaffirmed a "hard
commitment" late on Wednesday that it will not drop the floor on
its crown range before the second quarter of 2017. The bank has
bought billions of euros in the last few months. 
    "Flow into the crown looks strong and constant at the
moment," one dealer said.
    
           CEE      SNAP   AT  1700       
           MARKETS  SHOT  CET         
                    CURRENCIES            
                    Late  Prev  Dail  Chan
                    st    ious  y     ge
                    bid   clos  chan  in
                          e     ge    2016
 Czech     <EURCZK  27.0  27.0   +0.  -0.1
 crown     =>        260   260   00%    0%
 Hungary   <EURHUF  306.  305.  -0.1  2.80
 forint    =>       0600  5300    7%     %
 Polish    <EURPLN  4.29  4.30   +0.  -0.9
 zloty     =>         75    50   17%    2%
 Romanian  <EURRON  4.50  4.50  -0.0  0.36
 leu       =>         30    01    7%     %
 Croatian  <EURHRK  7.50  7.50   +0.  1.74
 kuna      =>         80    81   00%     %
 Serbian   <EURRSD  123.  123.  -0.0  -1.3
 dinar     =>       1500  1300    2%    6%
 Note:     calcula  prev  clos  1800      
 daily     ted      ious  e at  CET   
 change    from                       
                    STOC                  
                    KS                
                    Late  Prev  Dail  Chan
                    st    ious  y     ge
                          clos  chan  in
                          e     ge    2016
 Prague             886.  890.  -0.4  -7.2
                      64    74    6%    9%
 Budapest           2814  2839  -0.9   +17
                    0.87  6.87    0%  .64%
 Warsaw    <.WIG20  1727  1760  -1.8  -7.0
           >         .55   .43    7%    8%
 Buchares           6858  6919  -0.8  -2.0
 t                   .69   .39    8%    8%
 Ljubljan  <.SBITO  726.  727.  -0.1   +4.
 a         P>         57    62    4%   37%
 Zagreb    <.CRBEX  1971  1990  -0.9   +16
           >         .69   .88    6%  .69%
 Belgrade  <.BELEX  636.  634.   +0.  -1.2
           15>        13    86   20%    4%
 Sofia     <.SOFIX  510.  509.   +0.   +10
           >          34    24   22%  .73%
                    BOND                  
                    S                 
                    Yiel  Yiel  Spre  Dail
                    d     d     ad    y
                    (bid  chan  vs    chan
                    )     ge    Bund  ge
                                      in
 Czech                                spre
 Republic                             ad
   2-year  <CZ2YT=  -0.6  -0.0  -003  -2bp
           RR>        84    22   bps     s
   5-year  <CZ5YT=  -0.1  -0.0   +03   +2b
           RR>        25    06  6bps    ps
           <CZ10YT  0.32  -0.0   +03   +2b
 10-year   =RR>        8    16  0bps    ps
 Poland                                   
   2-year  <PL2YT=  1.76  -0.0   +24  -1bp
           RR>         2    13  2bps     s
   5-year  <PL5YT=  2.43  -0.0   +29  -2bp
           RR>         3     4  2bps     s
           <PL10YT  3.02  -0.0   +30   +1b
 10-year   =RR>        7    29  0bps    ps
           FORWARD  RATE  AGREEMENT       
                    3x6   6x9   9x12  3M
                                      inte
                                      rban
                                      k
 Czech     <CZKFRA  0.28  0.25  0.22     0
 Rep       ><PRIBO                    
           R=>                        
 Hungary   <HUFFRA  0.75  0.74  0.75  0.87
           ><BUBOR                    
           =>                         
 Poland    <PLNFRA  1.74  1.74  1.73  1.72
           ><WIBOR                    
           =>                         
 Note:     are for                        
 FRA       ask                        
 quotes    prices                     
 *****************************************
 *********************
 
 ($1 = 271.8000 forints)

 (Additional reporting by Jason Hovet and Robert Muller in
Prague/Marcin Goettig in Warsaw; Editing by Catherine Evans)

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