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CEE MARKETS-Warsaw leads stocks lower, Slovenian bonds fall as minister offers to resign

offers to resign@

* Stocks mostly drop on corporate news, EU sentiment

* Warsaw's PZU leads equities decline

* Currencies, bonds shrug off Draghi's dovish comments

(Adds Slovenian finance minister offering to resign, forint's fall against the zloty) BUDAPEST, May 30 (Reuters) - Warsaw led a retreat in central European shares as investors, underwhelmed by dividend payments and takeover offers announced by some companies on Tuesday, booked profits from the multi-year highs of recent weeks. Worries over a potential early election in Italy weighed on investor sentiment across Europe, though the main impact was on bank shares in the European Union. Central Europe's main equities indices reached multi-year highs earlier this month, helped by reports of good first-quarter earnings and dividend payments. Bucharest retained its momentum and again set a new nine-year high on Tuesday, but Warsaw had shed 1.2 percent and Prague 0.6 percent by 1242 GMT. The decline in Warsaw was led by PZU, the biggest Polish insurer, whose stocks fell 2.6 percent after it said it would pay a dividend of 1.4 zlotys ($0.3740) per share. PZU shares hit two-year highs last week. "The market seems to be disappointed by the amount of dividend," said Jaroslaw Janusz, broker at Nobel Securities. An announcement by Polish pensions fund Aviva OFE that it had reduced its stake in PZU to below 5 percent may also be driving shares lower, Janusz said. Polish state-run energy firm PGNiG also shed 3 percent after surging last week due to good first-quarter results. Regional currencies were mixed and government bonds mostly eased slightly. The yield on Slovenia's 10-year bonds touched 11-month highs, and had jumped to 1.286 percent by 1250 GMT from Monday's 0.958 percent, after Finance Minister Mateja Vranicar Erman offered to step down. Prime Minister Miro Cerar did not accept Erman's resignation. Regional markets shrugged off comments from European Central Bank head Mario Draghi that the euro zone still needs substantial stimulus given that growth is improving but inflation remains subdued. In past years, such dovish comments would often have lifted government bonds and currencies. The forint had eased 0.1 percent and the zloty firmed 0.3 percent against the euro by 1242 GMT, with the Hungarian currency falling to a 2-week low against the Polish currency. "I do not rule out forint/zloty cross trades, but even trade in the euro is very thin," one dealer said, adding the next event that could set direction for regional currencies could be the publication of U.S. payrolls data on Friday. "Weak figures pointing to no Fed rate hike in June could in theory help the forint, but if it causes uncertainty, even the opposite could happen," the dealer said.

CEE MARKETS SNAPSH AT 1442 CET

OT CURRENCIES

Latest Previo Daily Change

us

bid close change in

2017

Czech crown 26.470 26.500 +0.11 2.03% 0 0 % Hungary 308.30 308.00 -0.10% 0.17% forint 00 50 Polish zloty 4.1730 4.1841 +0.26 5.53%

%

Romanian leu 4.5670 4.5658 -0.03% -0.70% Croatian kuna 7.4200 7.4145 -0.07% 1.82% Serbian dinar 122.52 122.67 +0.12 0.68% 00 00 % Note: daily calculated previo close 1800 change from us at CET

STOCKS

Latest Previo Daily Change

us

close change in

2017

Prague 1007.2 1012.9 -0.56% +9.29 5 0 % Budapest 34259. 34138. +0.35 +7.05 02 11 % % Warsaw 2296.0 2323.5 -1.18% +17.8 7 8 7% Bucharest 8717.8 8673.5 +0.51 +23.0 2 0 % 5% Ljubljana 782.22 785.95 -0.47% +9.01

%

Zagreb 1847.6 1853.4 -0.31% -7.38% 3 2 Belgrade 719.15 717.64 +0.21 +0.25 % % Sofia 655.31 655.51 -0.03% +11.7

5% BONDS

Yield Yield Spread Daily (bid) change vs change Bund in Czech spread

Republic

2-year -0.16 0.023 +055b +1bps

ps

5-year -0.087 -0.024 +034b -4bps

ps

10-year 0.744 -0.015 +044b -2bps

ps Poland

2-year 1.922 -0.053 +263b -6bps

ps

5-year 2.701 0.007 +312b -1bps

ps

10-year 3.28 0.007 +298b +0bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interb ank

Czech Rep <PR 0.36 0.42 0.49 0

IBOR=>

Hungary <BU 0.18 0.22 0.28 0.15

BOR=>

Poland <WI 1.752 1.769 1.807 1.73

BOR=>

Note: FRA are for ask quotes prices ********************************************************* ****

(Additional reporting by Bartosz Chmielewski in Warsaw; Editing