April 26, 2017 / 1:52 PM / 4 months ago

CEE MARKETS-Polish stocks hit 22-month high, though France impact fades

    * Attention turns local, after lift from French election
    * PZU upgrade, Lotos earnings reverse fall of Warsaw stock
index
    * Prospect of low interest rates, margins weigh on OTP Bank
shares

 (Adds renewed rise of Polish stocks)
    By Sandor Peto
    BUDAPEST, April 26 (Reuters) - Polish equities climbed to
their highest since mid-2015 on Wednesday as attention turned to
local news in Central European markets and away from the risks
related to France's elections.
    Stocks and currencies in the region jumped earlier this week
after centrist Emmanuel Macron won the first round of French
presidential elections on Sunday, lessening the risk of a shift
to the far right.
    That rally lost steam by Wednesday. But Warsaw's main
equities index reversed an early decline and rose 1.4
percent by 1257 GMT.
    The index was pushed up by insurer PZU, which
surged 5.2 percent after JP Morgan raised its recommendation for
the share to "overweight" from "neutral".
    Polish refiner Lotos jumped 9.3 percent, after
reporting 288 percent annual rise in first-quarter earnings
.
    BZW BK stocks, on the other hand, plunged almost 4
percent after Poland's third-biggest bank reported a 19 percent
annual fall in first-quarter profit.
    Budapest's main index shed 0.7 percent. The decline was led
by a 1.7 percent drop for OTP, the region's biggest independent
bank, after Hungary's central bank signalled that it intended to
keep interest rates low, eroding banks' interest income.  
   "Some investors are worried that the central bank may take
measures to reduce bank margins," said Monika Kiss, an analyst
at the Budapest-based brokerage Equilor.
    The National Bank of Hungary has said repeatedly that it
wants stronger competition among banks in lending and that bank
mortgage spreads were too high.
    "Yesterday's central bank (rate) statement was as expected,
but it underpinned that loose monetary policy will remain and
that is not favourable to banks," Kiss said.
    While fresh central bank signals that it may take measures
to tighten banks' margins and the rate statement affected OTP,
Kiss added that the stock "remains a good paper". 
    The forint and the Czech crown eased by
a quarter of percent against the euro. The crown has so far not
surged in value since the central cap lifted its cap on its
value, 27 to the euro.
    "The market is shallow," said a dealer in Prague. "All those
who bought it at 27 are waiting for 26-26.5 to cash out. They
are waiting for the crown to move (higher) with good numbers
from economy, rather than just market swings which last only
couple of hours."
    The leu weakened by 0.1 percent. Government
figures late on Tuesday showed a small budget surplus in the
first quarter but did not expel fears of a full-year deficit
overshoot in 2017.
    The government plans further public-sector wage increases,
even though it would need to curb spending to keep the deficit
below the European Union's ceiling, 3 percent of gross domestic
product.
    "However, the current space for manoeuvre will surely be
more limited by the recent (politically irreversible) wage and
pension hikes, plus new ones to come into force in July 2017,"
Erste analysts said in a note.
    
              CEE        SNAPS   AT  1457          
              MARKETS    HOT    CET           
                         CURRENCIES                
                         Lates  Previ  Daily  Chang
                         t      ous           e
                         bid    close  chang  in
                                       e      2017
 Czech crown             26.95  26.88  -0.25  0.21%
                            10     40      %  
 Hungary                 312.7  311.8  -0.28  -1.26
 forint                    500    750      %      %
 Polish                  4.224  4.222  -0.04  4.25%
 zloty                       5      8      %  
 Romanian                4.531  4.527  -0.09  0.09%
 leu                         0      0      %  
 Croatian                7.471  7.466  -0.06  1.13%
 kuna                        0      5      %  
 Serbian                 123.2  123.3   +0.1  0.12%
 dinar                     000    750     4%  
 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                  998.2  992.9   +0.5   +8.3
                             2      8     3%     1%
 Budapest                33290  33519  -0.68   +4.0
                           .35    .07      %     2%
 Warsaw                  2385.  2353.   +1.3   +22.
                            27     17     6%    45%
 Bucharest               8218.  8260.  -0.50   +16.
                            94     33      %    00%
 Ljubljana               788.2  777.2   +1.4   +9.8
                             5      9     1%     5%
 Zagreb                  1932.  1937.  -0.29  -3.15
                            02     55      %      %
 Belgrade     <.BELEX15  731.5  732.4  -0.12   +1.9
              >              6      1      %     8%
 Sofia                   651.3  653.7  -0.37   +11.
                             6      6      %    07%
                         BONDS                     
                         Yield  Yield  Sprea  Daily
                                       d      
                         (bid)  chang  vs     chang
                                e      Bund   e in
 Czech                                        sprea
 Republic                                     d
   2-year     <CZ2YT=RR  0.023  0.023   +072   +4bp
              >                          bps      s
   5-year     <CZ5YT=RR  0.245  0.023   +058   +4bp
              >                          bps      s
   10-year    <CZ10YT=R  0.991  -0.03   +063  -2bps
              R>                         bps  
 Poland                                            
   2-year     <PL2YT=RR  1.985  0.003   +268   +2bp
              >                          bps      s
   5-year     <PL5YT=RR  2.897  -0.01   +323   +0bp
              >                     8    bps      s
   10-year    <PL10YT=R  3.488  0.027   +313   +4bp
              R>                         bps      s
              FORWARD    RATE   AGREEMENT          
                         3x6    6x9    9x12   3M
                                              inter
                                              bank
 Czech Rep            <   0.31   0.37   0.46      0
              PRIBOR=>                        
 Hungary              <   0.23   0.33   0.42   0.16
              BUBOR=>                         
 Poland               <  1.753  1.785  1.838   1.73
              WIBOR=>                         
 Note: FRA    are for                              
 quotes       ask                             
              prices                          
 **************************************************
 ************
 
 (Additional reporting by Luiza Ilie in Bucharest, Jason Hovet
in Prague, Marcin Goclowski in Warsaw; Editing by Larry King)
  
 
 

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