May 4, 2018 / 9:50 AM / a year ago

CEE MARKETS-Romanian stocks outperform on BRD results, rate hike expectation

    * Bucharest stocks, leu rise as central bank seen increasing
    * Zloty leads currency gains as exporters return
    * BRD bank profits boost Bucharest index, Erste knocks down
    * Crown firms as investors digest central bank comments

 (Adds zloty gains, analyst comment, U.S. data)
    By Sandor Peto
    BUDAPEST, May 4 (Reuters) - Romanian shares outperformed
Central European peers, and the leu firmed on Friday due to a
solid earnings report from BRD bank and expectations for a
central bank interest rate hike on Monday.
    The leu traded at 4.66 against the euro at 1425
GMT, firming 0.15 percent, more than the forint and
the Czech crown.
    The zloty half a percent to trade at 4.2478 versus
the euro, as local traders and exporters returned after bank
holidays on Tuesday and Thursday in Poland.
    "I think that the zloty will return to about 4.20-4.22 vs
euro in the next few sessions," said Adam Antoniak, senior
economist at Bank Pekao.
    Tuesday was a holiday across Central Europe and a rally in
the dollar in global markets knocked regional currencies down to
multi-month lows against the euro.
    Domestic players buoyed them on Friday even though the
greenback firmed to its highest levels this year despite
disappointing U.S. employment data.
    The figures may mean less pressure on the Federal Reserve to
increase interest rates, and that could keep Central European
yields relatively attractive.
    Romanian government bonds underperformed the region, with
their yields rising by a few basis points ahead of Monday's
central bank meeting.
    Five out of eight analysts projected in a Reuters poll last
month that the bank would increase its benchmark interest rate
further at the meeting, by a quarter percentage point to 2.5
    While the region's equity markets were mixed, Bucharest's
main index led gainers, rising by almost one percent.   
    It was driven by a 3 percent rise in the shares of two
banks, Banca Transilvania and Societe Generale unit
    BRD reported a 26 percent annual jump in the group's
first-quarter net profit.
    Warsaw led regional stock losers, with its
blue-chip index shedding 2.6 percent. With its two holidays,
Poland had missed part of the decline in equities in other stock
    Prague's main index fell 1.4 percent, knocked down by
an almost 5 percent plunge in Erste bank. 
    Austrian-based Erste Group reported an annual surge in
first-quarter net profit, but an increase in its costs
overshadowed that result.
    Hungarian oil group MOL shed 2.8 percent after
mixed results, but Budapest's main index rose 0.8
percent, helped by a rebound in OTP Bank shares to
near 11,000 forints, the support line they pierced in a plunge
on Thursday.
    Czech bonds moved sideways, while the crown firmed
0.1 percent to 25.495 against the euro.
    The Czech central bank projected it may lift interest rates
further only near the end of 2018. 
    But some market participants expect an earlier rise as the
crown is far from 24.6, the quarterly average projected by the
bank for the last quarter of the year.
            CEE       SNAPSHOT   AT                         
            MARKETS             1625 CET            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2018
 Czech      <EURCZK=   25.4950   25.5150    +0.08%    +0.18%
 crown      >                                       
 Hungary    <EURHUF=  314.0100  314.3300    +0.10%    -0.99%
 forint     >                                       
 Polish     <EURPLN=    4.2478    4.2687    +0.49%    -1.68%
 zloty      >                                       
 Romanian   <EURRON=    4.6600    4.6670    +0.15%    +0.42%
 leu        >                                       
 Croatian   <EURHRK=    7.4000    7.4130    +0.18%    +0.41%
 kuna       >                                       
 Serbian    <EURRSD=  118.0300  118.1000    +0.06%    +0.40%
 dinar      >                                       
 Note:      calculated from               1800 CET          
                      Latest    Previous  Daily     Change
                                close     change    in 2018
 Prague                1098.27  1113.350    -1.35%    +1.87%
 Budapest             37959.91  37660.99    +0.79%    -3.60%
 Warsaw                2233.57   2291.92    -2.55%    -9.25%
 Bucharest             8784.79   8705.10    +0.92%   +13.30%
 Ljubljana  <.SBITOP    844.23    839.79    +0.53%    +4.69%
 Zagreb                1837.72   1840.08    -0.13%    -0.28%
 Belgrade   <.BELEX1    739.76    738.92    +0.11%    -2.64%
 Sofia                  652.88    658.81    -0.90%    -3.63%
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
 Czech                                              spread
   2-year   <CZ2YT=R    0.7930    0.0430   +136bps     +4bps
   5-year   <CZ5YT=R    1.2130    0.0010   +128bps     -2bps
   10-year  <CZ10YT=    1.7410    0.0130   +120bps     +0bps
   2-year   <PL2YT=R    1.5270    0.0100   +209bps     +0bps
   5-year   <PL5YT=R    2.4570   -0.0030   +252bps     -2bps
   10-year  <PL10YT=    3.1570   -0.0130   +261bps     -3bps
            FORWARD   RATE      AGREEMEN                    
                      3x6       6x9       9x12      3M
 Czech Rep                0.97      1.08      1.18      0.90
 Hungary                  0.11      0.16      0.23      0.05
 Poland                   1.73      1.75      1.78      1.70
 Note: FRA  are for ask prices                              
 (Additional reporting by Luiza Ilie in Bucharest, Jason Hovet
in Prague and Marcin Gottig in Warsaw; editing by David Evans
and Louise Heavens)
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