November 28, 2018 / 11:06 AM / 10 months ago

CEE MARKETS-Polish stocks recover, shrugging off Russia-Ukraine tension

    * Warsaw stocks continue to recover
    * Scandal-hit Polish bank reports decline in Q3 loss
    * Russia-Ukraine tension weighs on CEE mod, impact limited

    By Sandor Peto and Alicja Ptak
    BUDAPEST/WARSAW, Nov 28 (Reuters) - Polish stocks rose to a
two-week high on Wednesday, continuing to recover from a
corruption scandal, even though tension between Russia and
Ukraine weighed on the mood in European equities markets.
    Polish shares plunged two weeks ago when Marek Chrzanowski,
the head of financial regulator KNF, resigned, after Getin Noble
Bank owner Leszek Czarnecki accused him of suggesting
KNF could support Getin if it hired a lawyer he recommended.
    Worries that the scandal could hurt the banking system have
eased since then, and Polish equities got additional support
from legislation to reverse legal changes concerning the Supreme
Court that the European Union had condemned.      
    Both Warsaw's blue-chip stock index and the index
of its listed bank shares rose 1.2 percent by 1008 GMT.
Other Central European indices were little changed.
    Getin Noble shares were almost 3 percent higher after the
troubled bank reported its third-quarter net loss shrank
compared with a year ago.
    After falling to a fifth of its end-2007 value by the peak
of the scandal, the stock has gained almost 25 percent in the
past two weeks. 
    Deposit outflows from the bank has returned to normal levels
before the scandal, and Czarnecki had not withdrawn his earlier
promise to increase the bank's capital, Getin Noble CEO Artur
Klimczak told a news conference on Wednesday. 
    Budapest's main stock index, meanwhile, dropped 0.2
percent, giving up some of the past week's gains, which had
pushed it to a 10-month high by Tuesday.
    The pressure on Central European markets from the conflict
between Russia and Ukraine over a naval incident remained
limited. Senior European politicians had raised the possibility
of new sanctions against Moscow.
    "People mostly think that there will be no escalation which
would lead to additional sanctions," said Noemi Holecz, chief
analyst of Equilor Brokerage in Budapest. 
    The region's currencies remained range-bound and government
bond yields changed little. An early weakening of the euro in
its closely watched dollar cross stalled. 
    Federal Reserve Chair Jerome Powell's comments later on
Wednesday will be watched, but he is due to speak after Central
European markets close, dealers said.
    "What they have said so far (concerning interest rate
prospects), have been mixed, but yes, the comments can have an
impact," one Budapest-based fixed income trader said.
    Expectations for fewer Fed rate hikes make Central European
assets more attractive.
            CEE       SNAPSHOT   AT                         
            MARKETS             1108 CET            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2018
 Czech      <EURCZK=   25.9170   25.9400    +0.09%    -1.45%
 crown      >                                       
 Hungary    <EURHUF=  324.3100  324.3500    +0.01%    -4.13%
 forint     >                                       
 Polish     <EURPLN=    4.2990    4.2967    -0.05%    -2.85%
 zloty      >                                       
 Romanian   <EURRON=    4.6600    4.6606    +0.01%    +0.42%
 leu        >                                       
 Croatian   <EURHRK=    7.4140    7.4235    +0.13%    +0.22%
 kuna       >                                       
 Serbian    <EURRSD=  118.3100  118.3900    +0.07%    +0.16%
 dinar      >                                       
 Note:      calculated from               1800 CET          
                      Latest    Previous  Daily     Change
                                close     change    in 2018
 Prague                1065.39  1064.390    +0.09%    -1.18%
 Budapest             39537.56  39601.70    -0.16%    +0.41%
 Warsaw                2248.59   2222.85    +1.16%    -8.64%
 Bucharest             8580.29   8573.96    +0.07%   +10.66%
 Ljubljana  <.SBITOP    819.20    820.20    -0.12%    +1.59%
 Zagreb                1722.87   1724.79    -0.11%    -6.51%
 Belgrade   <.BELEX1    743.63    742.55    +0.15%    -2.13%
 Sofia                  582.86    583.19    -0.06%   -13.96%
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
 Czech                                              spread
   2-year   <CZ2YT=R    1.7370    0.0860   +238bps     +9bps
   5-year   <CZ5YT=R    1.8380    0.0120   +208bps     +2bps
   10-year  <CZ10YT=    2.0880    0.0260   +175bps     +4bps
   2-year   <PL2YT=R    1.5800   -0.0040   +222bps     +0bps
   5-year   <PL5YT=R    2.4350    0.0050   +268bps     +1bps
   10-year  <PL10YT=    3.1720    0.0050   +284bps     +2bps
            FORWARD   RATE      AGREEMEN                    
                      3x6       6x9       9x12      3M
 Czech Rep                2.18      2.28      2.35      2.02
 Hungary                  0.30      0.54      0.84      0.13
 Poland                   1.76      1.79      1.84      1.72
 Note: FRA  are for ask prices                              
 (Reporting by Sandor Peto)
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