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CEE MARKETS-Inflation drives Czech crown to post cap high

BUDAPEST/PRAGUE, June 9 (Reuters) - The Czech crown hit its highest level since the central bank removed its cap on the currency in April, boosted on Friday by higher than expected May inflation data which pointed to possible monetary tightening later this year. Among other currencies the forint and the Romanian leu were up 0.1 percent and the zloty flat, with Central European markets showing no significant reaction to the unexpected outcome of Britain's elections. The crown led gains on Thursday, hitting its highest level since 2013, after Czech central bankers repeated that they could start raising interest rates this year, in contrast with dovish policies elsewhere in the region. On Friday the crown gained 0.4 percent versus the euro after breaking a resistance level of 26.30 to trade at 26.20. Czech year-on-year inflation came in above market forecasts at 2.4 percent in May, although this was below the central bank's own prediction of 2.6 percent. The bank targets inflation at 2 percent. "The CNB has to some degree a free hand. Its own outlook argues for growth in rates in the second half of the year," Radomir Jac, chief economist for Generali Investments CEE, said, adding that the central bank did not need to hurry to hike. "Raising rates by the end of this year cannot be ruled out. But I see a number of arguments for stable rates this year and the first rise in the spring of 2018," Jac said. The CNB has also said that the more the crown firms from its former cap at 27 against the euro, the less the need for tightening monetary policy. An increase in Czech rates -- which stand at a technical zero -- would be the first in about a decade. Shares in Kofola jumped 8 percent after its founders and majority owners said they would raise their stake in the Czech soft drinks maker to 68 percent in a series of transactions that will see a big private equity investor exit. The company also launched a tender offer for up to 5 percent of shares. The Polish and Czech stock markets gained in early trade, while Budapest stocks was 0.4 percent lower by 0800 GMT.

CURRENCIES

Latest Previ Daily Change

ous

bid close change in 2017 Czech crown 26.2050 26.30 +0.39% 3.06%

60

Hungary forint 307.8000 308.1 +0.12% 0.33%

700

Polish zloty 4.1975 4.197 +0.00% 4.92%

6

Romanian leu 4.5640 4.567 +0.08% -0.64%

8

Croatian kuna 7.4160 7.421 +0.07% 1.88%

0

Serbian dinar 122.5100 122.5 +0.07% 0.69%

900

Note: daily calculated previous close 1800 CET change from at

STOCKS

Latest Previ Daily Change

ous

close change in 2017 Prague 1010.84 1006. +0.46% +9.68%

22

Budapest 35302.06 35270 +0.09% +10.31 .95 % Warsaw 2348.00 2340. +0.33% +20.54 23 % Bucharest 8597.10 8673. -0.88% +21.34 56 % Ljubljana 787.10 790.2 -0.39% +9.69%

2

Zagreb 1818.73 1828. -0.55% -8.83%

78

Belgrade 0.00 718.9 +0.00% -100.00 6 % Sofia 677.26 677.3 -0.02% +15.49 9 % FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interba nk

Czech Rep <P 0.34 0.42 0.49 0

RIBOR=>

Hungary <B 0.19 0.23 0.29 0.15

UBOR=>

Poland <W 1.754 1.767 1.792 1.73

IBOR=>

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

(Writing by Krisztina Than; Editing by Alexander Smith)