October 4, 2016 / 9:02 AM / a year ago

CEE MARKETS-OTP Bank leads stocks higher as German shares rebound

* JP Morgan lifts target for OTP Bank shares
    * Polish stock index up on financial sector, clothes
retailer LPP
    * Currencies, bonds ease slightly, Fed rate hike in prospect
    * Czech minister says exit from crown cap should be cautious

    By Sandor Peto
    BUDAPEST, Oct 4 (Reuters) - Budapest led a firming of
Central European stock markets on Tuesday, with OTP Bank
 rising to a 12-day high after JP Morgan lifted its
target price for the shares.
    Shares of OTP, the region's biggest independent lender, rose
2.2 percent to 7,424 forints ($26.95) by 0816 GMT, after JP
Morgan boosted its target to 9,570 forints from 7,310 forints.
    Stock prices on the Frankfurt bourse, reopening
after a holiday, reflected improved sentiment over Deutsche Bank
 whose problems cast gloom on the European banking
sector last week.
    Deutsche shares hit a record low on Friday but rose to
two-week highs on Tuesday on prospects of a swift deal with U.S.
authorities over a multi-billion dollar fine. 
    OTP, heading towards 8-and-1/2-year highs reached last
month, helped Budapest's main stock index gain 1.2
percent.
    Warsaw's bluechip stock index got extra support
from a surge by shares of Poland's biggest clothing retailer LPP
 after it reported a 20 percent rise in revenue in
September.
    LPP shares rose 6.5 percent, setting a two-month high.
    Sentiment in Central European markets remained underpinned
by a rise in September manufacturing activity indices in 
Hungary, Czech Republic and Poland, shown in figures released on
Monday.
    But currencies were treading water and were even slightly
bearish in early trade, with the forint retreating
from a one-week high reached late on Monday. 
    It eased 0.1 percent to 307.87.
    Government bond yields moved a tad higher.
    "The rise is not bigger than one basis points, and it is
caused by yesterday's Fed (Federal Reserve) rate setter
comments," one Budapest-based fixed income trader said.
    Cleveland Fed President Loretta Mester said the Fed should
not delay in raising interest rates in order to keep up with the
economy. A rise in U.S. rates could make Central European debt
yields relatively less interesting.
    The Czech crown's euro exchange rate implied in six-month
forwards was flat at 26.908.
    The Czech central bank has been keeping the spot crown rate
 on the weaker side of 27 since 2013 and last week
shifted the earliest possible end to the policy until the second
quarter of next year while reaffirming it expected to refloat
the crown in mid-2017.
    Industry Minister Jan Mladek said on Tuesday the bank should
ensure it does not shock the economy when it eventually exits
the intervention regime next year. 
    
           CEE      SNAPSH   AT  1016 CET               
           MARKETS  OT                       
                    CURRENCIES                          
                    Latest  Previo  Daily    Change
                            us               
                    bid     close   change   in 2016
 Czech     <EURCZK  27.020  27.024   +0.02%       -0.08%
 crown     =>            0       5           
 Hungary   <EURHUF  307.87  307.45   -0.13%        2.20%
 forint    =>           00      50           
 Polish    <EURPLN  4.3000  4.2985   -0.04%       -0.98%
 zloty     =>                                
 Romanian  <EURRON  4.4560  4.4530   -0.07%        1.41%
 leu       =>                                
 Croatian  <EURHRK  7.5050  7.4995   -0.07%        1.79%
 kuna      =>                                
 Serbian   <EURRSD  122.95  123.03   +0.07%       -1.20%
 dinar     =>           00      00           
 Note:     calcula  previo  close   1800                
 daily     ted      us      at      CET      
 change    from                              
                    STOCKS                              
                    Latest  Previo  Daily    Change
                            us               
                            close   change   in 2016
 Prague             876.56  868.59   +0.92%       -8.34%
 Budapest           28348.  28012.   +1.20%      +18.51%
                        09      37           
 Warsaw    <.WIG20  1733.0  1725.4   +0.44%       -6.78%
           >             4       4           
 Buchares           6941.6  6956.4   -0.21%       -0.89%
 t                       9       8           
 Ljubljan  <.SBITO  736.49  733.39   +0.42%       +5.79%
 a         P>                                
 Zagreb    <.CRBEX  1944.0  1942.9   +0.06%      +15.06%
           >             1       4           
 Belgrade  <.BELEX  635.63  636.28   -0.10%       -1.32%
           15>                               
 Sofia     <.SOFIX  508.08  507.07   +0.20%      +10.24%
           >                                 
                    BONDS                               
                    Yield   Yield   Spread   Daily
                    (bid)   change  vs Bund  change in
 Czech                                       spread
 Republic                                    
   2-year  <CZ2YT=  -0.579  -0.007   +011bp        +0bps
           RR>                            s  
   5-year  <CZ5YT=  -0.201  -0.002   +036bp        +0bps
           RR>                            s  
           <CZ10YT   0.249       0   +035bp        +0bps
 10-year   =RR>                           s  
 Poland                                                 
   2-year  <PL2YT=   1.741  -0.018   +243bp        -2bps
           RR>                            s  
   5-year  <PL5YT=   2.314  -0.008   +288bp        -1bps
           RR>                            s  
           <PL10YT   2.896   0.009   +299bp        +1bps
 10-year   =RR>                           s  
           FORWARD  RATE    AGREEMENT                   
                    3x6     6x9     9x12     3M
                                             interbank
 Czech     <CZKFRA    0.28    0.25     0.22            0
 Rep       ><PRIBO                           
           R=>                               
 Hungary   <HUFFRA    0.74    0.71     0.72         0.88
           ><BUBOR                           
           =>                                
 Poland    <PLNFRA     1.7    1.66     1.64         1.71
           ><WIBOR                           
           =>                                
 Note:     are for                                      
 FRA       ask                               
 quotes    prices                            
 *******************************************************
 *******
 ($1 = 275.4500 forints)

 (Additional reporting from Jason Hovet in Prague; editing by
Susan Thomas)

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