August 11, 2017 / 8:45 AM / 9 days ago

CEE MARKETS-Geopolitics hits stocks despite solid corporate earnings

    * U.S.-North Korea tension curbs risk appetite
    * Hungary's OTP retreats after surge on robust Q2 results
    * Currencies near multi-week lows
    * Czech central bank says crown strength key to policy
course

    By Sandor Peto and Gergely Szakacs
    BUDAPEST, Aug 11 (Reuters) - Central European stocks fell
and currencies traded near multi-week lows as strong corporate
results were outweighed by risk aversion due to rising tension
between the United States and North Korea.
    Hungarian bank OTP, the region's biggest
independent lender, reported a 12 percent annual rise in
second-quarter earnings.
    Its shares pierced the 10,000-forint ($38.46) line, setting
a 10-year high, before retreating to about 9,850 forints, down
0.8 percent, contributing to a half percent fall in Budapest's
main stock index.
    Prague stocks fell 0.7 percent. Bucharest's main index
 was steady, helped by a jump in the earnings of gas
producer Romgaz and gas pipeline operator Transgaz
. 
    Analysts said the robust results could lift OTP and the .BUX
which is still near the record highs set earlier this week.
"Despite the global 'cataclysm', we expect a mild rise in the
BUX index," Erste analysts said in a note.  
    OTP's Deputy CEO Laszlo Bencsik told a news conference that
the rise of the shares above 10,000 forints "reflects the
performance of the region, and that Hungary is on a robust
growth track, on which we expect it to stay in the next years."
    Romanian data showed a retreat in annual industrial output
growth to 11.1 percent in June from 15.3 percent in May, in line
with earlier Hungarian and Czech figures.
    But the region's growth remains robust, and that is expected
to buoy its currencies according to a Reuters poll last week.

    The zloty traded off 5-month lows it set
overnight. The leu briefly fell to a 5-week low, but quickly
regained almost all the ground lost. 
    Romanian inflation rose in July, also in line with other
states in the region.
    "In all, this strengthens the case for the (Romanian)
central bank to act (tighten policy) sooner rather than later,
in our view," ING analysts said in a note.
    Last week the Czech central bank (CNB), which has overseen a
rise in inflation and a boom in mortgage lending, became the
first in the EU since 2012 to lift its ultra-low main interest
rate.
    The crown was steady at 26.175 against the euro at
0742 GMT, still near Wednesday's 26.195, its weakest level since
end-June.
    The CNB said in the minutes of last week's meeting that "the
timing of further steps in raising interest rates would be
conditional on the evolution of all key macroeconomic variables,
including the exchange rate of the koruna". 
    A firmer crown would help fight inflation, which has
exceeded the bank's 2 percent target, running at 2.5 percent in
July, but would reduce the scope for more rate hikes.    
               CEE MARKETS  SNAPSH   AT  0942 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2017
 Czech crown                26.175  26.178   +0.01   3.18%
                                 0       5       %  
 Hungary                    305.80  305.40  -0.13%   0.99%
 forint                         00      50          
 Polish zloty               4.2790  4.2835   +0.11   2.92%
                                                 %  
 Romanian leu               4.5760  4.5741  -0.04%  -0.90%
 Croatian                   7.3970  7.3995   +0.03   2.14%
 kuna                                            %  
 Serbian                    119.70  119.86   +0.13   3.05%
 dinar                          00      00       %  
 Note: daily   calculated   previo  close   1800          
 change        from         us      at      CET     
                            STOCKS                        
                            Latest  Previo  Daily   Change
                                    us              
                                    close   change  in
                                                    2017
 Prague                     1018.7  1025.8  -0.70%   +10.5
                                 4       7              4%
 Budapest                   36637.  36821.  -0.50%   +14.4
                                85      44              8%
 Warsaw                     2372.1  2382.6  -0.44%   +21.7
                                 2       7              8%
 Bucharest                  8333.5  8331.2   +0.03   +17.6
                                 5       2       %      2%
 Ljubljana                  807.25  808.68  -0.18%   +12.4
                                                        9%
 Zagreb                     1891.5  1886.3   +0.27  -5.18%
                                 6       9       %  
 Belgrade                     0.00  723.12   +0.00  -100.0
                                                 %      0%
 Sofia                      727.85  729.22  -0.19%   +24.1
                                                        2%
                            BONDS                         
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                    0.052  -0.052   +076b   -3bps
                                                ps  
   5-year                    0.104    0.02   +039b   +4bps
                                                ps  
   10-year                   0.888       0   +050b   +2bps
                                                ps  
 Poland                                                   
   2-year                     1.85   0.021   +256b   +4bps
                                                ps  
   5-year                    2.745   0.049   +303b   +7bps
                                                ps  
   10-year                   3.426       0   +304b   +2bps
                                                ps  
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
                                                    interb
                                                    ank
 Czech Rep             <PR     0.5    0.64    0.67       0
               IBOR=>                               
 Hungary               <BU    0.21    0.25    0.31    0.15
               BOR=>                                
 Poland                <WI   1.765     1.8   1.849    1.73
               BOR=>                                
 Note: FRA     are for ask                                
 quotes        prices                               
 *********************************************************
 *****
 ($1 = 260.0000 forints)

 (Additional reporting by Radu Marinas in Bucharest/Jan Lopatka
in Prague; Editing by Mark Trevelyan)
  
 
 

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