February 13, 2017 / 2:55 PM / 8 months ago

CEE MARKETS-Warsaw leads stocks rise, bonds ease as inflation rises

* Higher copper price, company earnings help Polish shares
    * Bonds ease, Polish 10-year paper leads yield rise
    * Polish CPI above forecasts, central bankers say no worry

 (Adds Polish inflation figures, dealer and analyst comments)
    By Sandor Peto
    BUDAPEST, Feb 13 (Reuters) - Central European stocks mostly
firmed on Monday, led by Warsaw's bluechip index which set a
17-month high on the back of higher copper prices and strong
company earnings.
    The regional trend was in line with a global rise in shares
due to expectations of economic stimulus in the United States.
    Prague's main index was at its highest since late
2015. Budapest shares also touched a record high, helped
by an 1.1 percent rise in OTP Bank shares, though the
9,000 forint ($31.06) mark, to hit the highest point since 2007.
    Warsaw's index rose 0.9 percent by 1405 GMT, with
copper producer KGHM firming 3.1 percent, after the
metal reached 20-month highs in London trade. 
    Power group PGE rose 3.6 percent after reporting 
strong 2016 earnings. 
    The Polish move extended a rally last week that was driven
by banks, due to better than expected bank earnings in the
region and comments from the ruling party's head, Jaroslaw
Kaczynski.
    He said on Friday that mortgage-holders who had borrowed in
Swiss francs should turn to the courts to seek redress for the
pain of increased repayments rather than expect the government
to impose a settlement on banks. 
    Regional currencies were mixed and rangebound. 
    "Without any substantial long dollar risk to be unwound, EM
(emerging markets) will need an improvement in the narrative
around growth and profitability for capital flows to recover and
for FX to meaningfully strengthen over the medium term," said 
Societe Generale analyst Jason Daw in a note.
    Bucharest stocks eased a third of a percent, giving
up some ground after reaching a 19-month high last week.
    Government bonds mostly eased, tracking other European
markets.
    Poland's 10-year bonds underperformed most European peers,
with their yield rising 5 basis points to 3.87 percent.
    The yield rose a bit further after Poland reported 1.8
percent annual inflation for January, above analysts' 1.6
percent forecasts.
    Low market liquidity caused the yield rise rather than the
data, one Warsaw-based trader said.
    Central bank rate setters Jerzy Zyzynski and Jerzy
Kropiwnicki said the inflation rise was not worrying.
  
    Citigroup analyst Eszter Gargyan was expecting a sharp rise
in January CPI in Hungary as well, but said in a note the
central bank would not "tighten monetary conditions as long the
inflation remains within the 2-4 percent target range". 
    Hungary will release inflation figures on Tuesday. Annual
inflation picked up to 1.8 percent in December.   
              CEE        SNAPS   AT  1505          
              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     50     2%      %
 Hungary                 308.3  308.2  -0.02  0.17%
 forint                    000    350      %  
 Polish                  4.311  4.307  -0.09  2.15%
 zloty                       0      2      %  
 Romanian                4.502  4.499  -0.06  0.72%
 leu                         4      5      %  
 Croatian                7.449  7.455   +0.0  1.42%
 kuna                        0      5     9%  
 Serbian                 123.9  123.8  -0.09  -0.51
 dinar                     800    700      %      %
 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                  969.4  964.3   +0.5   +5.1
                             4      1     3%     9%
 Budapest                33327  33156   +0.5   +4.1
                           .13    .09     2%     4%
 Warsaw                  2174.  2154.   +0.9   +11.
                            68     79     2%    64%
 Bucharest               7642.  7668.  -0.34   +7.8
                            41     55      %     7%
 Ljubljana               760.9  755.4   +0.7   +6.0
                             6      9     2%     4%
 Zagreb                  2155.  2163.  -0.35   +8.0
                            48     03      %     5%
 Belgrade     <.BELEX15  703.5  702.5   +0.1  -1.93
              >              2      8     3%      %
 Sofia                   605.1  604.4   +0.1   +3.1
                             5      7     1%     9%
                         BONDS                     
                         Yield  Yield  Sprea  Daily
                                       d      
                         (bid)  chang  vs     chang
                                e      Bund   e in
 Czech                                        sprea
 Republic                                     d
   2-year     <CZ2YT=RR  -0.56  -0.00   +022  -1bps
              >              5      9    bps  
   5-year     <CZ5YT=RR  0.107  -0.03   +054  -4bps
              >                     1    bps  
   10-year    <CZ10YT=R  0.495  -0.02   +016  -4bps
              R>                    8    bps  
 Poland                                            
   2-year     <PL2YT=RR  2.223  0.003   +301   +0bp
              >                          bps      s
   5-year     <PL5YT=RR  3.197  0.031   +363   +2bp
              >                          bps      s
   10-year    <PL10YT=R  3.889  0.063   +356   +5bp
              R>                         bps      s
              FORWARD    RATE   AGREEMENT          
                         3x6    6x9    9x12   3M
                                              inter
                                              bank
 Czech Rep            <   0.26   0.26    0.3      0
              PRIBOR=>                        
 Hungary              <   0.35    0.5   0.63   0.24
              BUBOR=>                         
 Poland               <   1.77   1.81  1.895   1.73
              WIBOR=>                         
 Note: FRA    are for                              
 quotes       ask                             
              prices                          
 **************************************************
 ************
 ($1 = 289.7500 forints)

 (Additional reporting by Bartosz Chmielewski in Warsaw; Editing
by Alison Williams)

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