March 2, 2018 / 10:22 AM / 6 months ago

CEE MARKETS-Stocks fall engulfs OTP Bank despite robust results

    * OTP reports strong earnings, but stocks reverse rise
    * Warsaw, Budapest lead stocks fall on global trade war
fears
    * Crown, after GDP data, bucks fx weakening led by zloty

    By Sandor Peto
    BUDAPEST, March 2 (Reuters) - Hungarian and Polish stocks
hit their lowest levels for several months on Friday, knocked by
fears of a global trade war, even though Central Europe's
biggest independent lender OTP  published an upbeat earnings
report.
    U.S. President Donald Trump announced big tariffs on steel
and aluminum imports, triggering fear of a global trade war and
a continued decline in equities prices across global markets.
    Stocks and currencies in Central Europe's emerging markets
have already taken a beating in past weeks due to rising global
inflation fears and signs that the Federal Reserve may increase
its interest rates faster than expected.
    "Mr Trump has put the cherry on the cake," said Equilor
analyst Zoltan Varga. 
    "In such global headwind, even good ships like OTP cannot
advance," he added.
    OTP reported record profits for 2017, projected
new acquisitions and reaffirmed a plan to increase dividend
payments on Friday.
    After an initial almost one percent rise, its shares fell
0.6 percent by 0944 GMT. 
    Budapest's main stock index fell 0.8 percent,
touching a four-month low, while Warsaw's bluechip index
 set an eight-month low, shedding one percent.
    The Hungarian index has been retreating from record highs
and Warsaw has declined from its highest levels since 2011 amid
the past months' global sell-off. Their loss on Friday was
smaller than a two percent decline in Fraknfurt's main index
.
    Before the recent retreat the region's equities and
currencies had received support from well-performing bank stocks
and robust economic growth.
    The Czech Republic published detailed fourth-quarter
economic output data on Friday, which showed hefty 5.2 percent
annual growth.
    The figures do not indicate rising inflation pressure and
are unlikely to bring forward further Czech central bank
interest rate hikes expected for later this year, Erste analyst
Jiri Polansky said in a note.
    The crown still firmed by 0.2 percent to 25.39
against the euro, while the forint and the leu
 shed 0.1 percent.
    The zloty, which has weakened more this week than its main
regional peers, after outperforming them earlier, fell by a
third of a percent to 4.197, approaching the 4.2 psychological
line and the multi-month lows beyond 4.2035.
    Despite global inflation concerns, the Polish central bank
is expected to keep its interest rates at record lows all this
year.            
    It will hold its next rate-setting meeting on March 7.
    
            CEE       SNAPSHOT   AT                         
            MARKETS             1044 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2018
 Czech      <EURCZK=   25.3900   25.4300    +0.16%    +0.60%
 crown      >                                       
 Hungary    <EURHUF=  313.8000  313.5000    -0.10%    -0.92%
 forint     >                                       
 Polish     <EURPLN=    4.1970    4.1830    -0.33%    -0.49%
 zloty      >                                       
 Romanian   <EURRON=    4.6605    4.6550    -0.12%    +0.41%
 leu        >                                       
 Croatian   <EURHRK=    7.4460    7.4475    +0.02%    -0.21%
 kuna       >                                       
 Serbian    <EURRSD=  117.8500  117.8700    +0.02%    +0.55%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2018
 Prague                1113.52  1117.730    -0.38%    +3.28%
                                       0            
 Budapest             37476.56  37767.85    -0.77%    -4.83%
 Warsaw                2312.62   2334.96    -0.96%    -6.04%
 Bucharest             8376.13   8411.68    -0.42%    +8.03%
 Ljubljana  <.SBITOP    810.43    811.08    -0.08%    +0.50%
            >                                       
 Zagreb                1842.39   1845.33    -0.16%    -0.03%
 Belgrade   <.BELEX1    747.01    750.66    -0.49%    -1.68%
            5>                                      
 Sofia                  684.81    684.74    +0.01%    +1.09%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    0.8220    0.0200   +138bps     +3bps
            R>                                      
   5-year   <CZ5YT=R    1.2540   -0.0110   +126bps     +1bps
            R>                                      
   10-year  <CZ10YT=    1.9030   -0.0150   +129bps     +1bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.6490    0.0020   +220bps     +2bps
            R>                                      
   5-year   <PL5YT=R    2.5410   -0.0330   +255bps     -1bps
            R>                                      
   10-year  <PL10YT=    3.2780   -0.0210   +266bps     +1bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                0.98      1.09      1.25      0.91
            <PRIBOR=                                
            >                                       
 Hungary                  0.08      0.12      0.19      0.02
                                                    
 Poland                   1.75      1.77      1.85      1.72
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 *************************************************          
 *************                                      
 

 (Additional reporting by Marcin Goettig, Editing by William
Maclean)
  
 
 
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