November 14, 2017 / 3:46 PM / a month ago

CEE MARKETS-Euro strength stifles currency rise on robust Q3 GDP data

    * Romania Q3 GDP leads with 8.8 pct annual growth
    * Advance of CEE currencies flounders as euro rallies
    * Banca Transilvania leads equities gain in Bucharest
    * Hungarian central bank still expected to ease policy

 (Recasts with retreat of currencies, Romanian bonds and
equities)
    By Sandor Peto and Radu-Sorin Marinas
    BUDAPEST/BUCHAREST, Nov 14 (Reuters) - Central European
currencies mostly gave up their early gains on Tuesday as many
investors preferred buying the euro after robust third-quarter
economic growth data from the European Union.
    Most of the region's currencies firmed 0.1-0.2 percent
versus the euro initially after strong output figures from the
region, led by the 8.8 percent annual growth rate in Romania.

    But Germany, the biggest economy in the euro zone, also
reported robust annual growth of more than 3 percent, and that
boosted the euro in almost all its crosses.
    At 1453 GMT, the forint was steady against the
euro and the zloty and the Czech crown were
weaker by 0.1 percent.
    "The euro's surge holds up the region's currencies, despite
the good local news (on output)," one Budapest-based fixed
income trader said.
    The gains of Central European equities were also limited as
investors shunned risky equities globally.
    Bucharest led, with its main stock index rising 1.1
percent, boosted by a 4 percent rise in the shares of Banca
Transilvania.
    The bank reported 18.7 percent annual jump in its
January-September net profits late on Monday, with its lending
surging.
    Romania's output growth exceeded all analyst forecasts in
the third quarter, mainly driven by a surge in wages, and the
robust figure will fuel expectations that the Romanian central
bank will start to lift interest rates soon, market participants
said.
    Romanian government bond yields rose to their highest levels
since 2014. Ten-year bonds traded at 4.55 percent, up 8 basis
points from Monday.
    The leu retained its early gain, trading 0.1
percent firmer against the euro at 4.65. But it stayed near
Monday's record lows of 4.657 despite the big output rise.
    It weakened through the 4.6 line after the Romanian central
bank said last week it would focus on keeping market interest
rates close to its benchmark rate and loosen its grip on the
currency.
    A jump in inflation could lead to rate hikes, fiscal
stimulus would also need to be cut back, and the scarcity of
labour resources will lead to a slowdown in growth, said ING
analyst Ciprian Dascalu.
    But this year's higher output will make Romania's budget and
current account deficits and public debt look better.
    "It looks that some worries could be offset by the economy
growing its way out of troubles," Dascalu said.
    Slower-growing Hungary has not faced overheating concerns,
and the Hungarian central bank may ease policy further at its
meeting next week, dealers said.
    "It may introduce long-term FX swaps," one dealer said.
    
               CEE MARKETS  SNAPSH   AT  1553 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2017
 Czech crown                25.580  25.552  -0.11%   5.58%
                                 0       5          
 Hungary                    311.89  311.93   +0.01  -0.98%
 forint                         00      00       %  
 Polish zloty               4.2405  4.2376  -0.07%   3.85%
 Romanian leu               4.6500  4.6529   +0.06  -2.47%
                                                 %  
 Croatian                   7.5515  7.5495  -0.03%   0.05%
 kuna                                               
 Serbian                    118.35  118.56   +0.18   4.22%
 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                     1064.3  1062.5   +0.17   +15.4
                                 5       6       %      9%
 Budapest                   39347.  39254.   +0.24   +22.9
                                56      00       %      5%
 Warsaw                     2459.3  2454.6   +0.19   +26.2
                                 4       0       %      5%
 Bucharest                  7826.2  7738.6   +1.13   +10.4
                                 4       6       %      6%
 Ljubljana                  789.08  787.92   +0.15   +9.96
                                                 %       %
 Zagreb                     1844.6  1842.0   +0.14  -7.53%
                                 9       4       %  
 Belgrade                   739.05  736.12   +0.40   +3.02
                                                 %       %
 Sofia                      669.62  669.22   +0.06   +14.1
                                                 %      9%
                            BONDS                         
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                    0.479   0.135   +122b   +14bp
                                                ps       s
   5-year                    0.883   0.051   +121b   +6bps
                                                ps  
   10-year                   1.716  -0.061   +132b   -4bps
                                                ps  
 Poland                                                   
   2-year                    1.613  -0.002   +236b   +0bps
                                                ps  
   5-year                    2.621   0.013   +295b   +2bps
                                                ps  
   10-year                   3.447   0.025   +305b   +4bps
                                                ps  
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
                                                    interb
                                                    ank
 Czech Rep             <PR    0.96    1.12    1.23       0
               IBOR=>                               
 Hungary               <BU    0.03   0.085    0.14    0.03
               BOR=>                                
 Poland                <WI    1.78   1.821   1.924    1.73
               BOR=>                                
 Note: FRA     are for ask                                
 quotes        prices                               
 *********************************************************
 *****
 
 
 
    

 (Reporting by Sandor Peto; Editing by Janet Lawrence)
  
 
 

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