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CEE MARKETS-Bond yields inch higher after hawkish ECB minutes

* Bond yields rise slightly further after Thursday's surge

* More hawkish ECB may have started yield rise trend -trader

* Forint firms after higher than expected trade surplus

* Hungarian, Polish ratings seen unchanged in reviews

BUDAPEST/BUCHAREST, July 7 (Reuters) - Central European government bonds slipped further on Friday following a surge in yields after the European Central Bank left the door open to monetary stimulus tapering on Thursday. ECB board member Benoit Coeure fine-tuned the message in interviews on Friday, saying that any policy adjustment should be careful to avoid disrupting markets, and underlying inflation remained weak despite a pick-up in growth in the euro zone. But after Thursday's jump in the 10-year Bund yield above 0.5 percent, many investors think hawkish comments from global central banks have triggered a trend of rising bond yields, one Budapest-based fixed income trader said. "Many people tend to think now that (ECB President Mario) Draghi's speech last week (about possible policy tweaks) was a watershed," the trader said, adding that "after years of strong price gains a correction looks reasonable". Hungary's 10-year bond yield has risen about 35 basis points in the past two weeks to 3.18 percent, while the country's shorter than one-year debt yields remain near zero, kept low by the Hungarian central bank's loose policies. Hungarian and Polish long-term yields rose 1-2 basis points on Friday after a 10 basis point jump on Thursday. The yield on Czech 10-year bonds was bid at 1.07 percent, up 5 basis points. The rise in long-term yields is caused by global factors, while domestic fundamentals remain strong and also shield currencies in the region which is immune to a recent decline n crude prices unlike some other emerging markets, analysts said. A surge in Hungary's budget deficit in June did not trigger worries as it was caused by one-off factors. Figures showing a higher-than expected May trade surplus helped the forint strengthen, one dealer said, adding that Moody's is unlikely to change the country's sovereign rating in a review due after local markets close. Fitch is due to review Poland's rating, but analysts expect no change. The only country in the region where a possible rise in the budget deficit has been a worry is Romania. Romania's 10-year bond yield was still flat, bid at 4.03 percent, after robust demand at an auction on Thursday, which followed significant expiries in Romanian debt last month. "With another large redemption on the horizon this month, liquidity should remain sufficient to keep rates subdued," ING analysts said in a note.

CEE MARKETS SNAPSH AT 1106 CET

OT CURRENCIES

Latest Previo Daily Change

us

bid close change in

2017

Czech crown 26.115 26.140 +0.10 3.42% 0 5 % Hungary 308.31 309.03 +0.23 0.17% forint 00 00 % Polish zloty 4.2345 4.2338 -0.02% 4.00% Romanian leu 4.5860 4.5903 +0.09 -1.11%

%

Croatian kuna 7.4140 7.4035 -0.14% 1.90% Serbian dinar 120.15 120.41 +0.22 2.66% 00 00 % Note: daily calculated previo close 1800 change from us at CET

STOCKS

Latest Previo Daily Change

us

close change in

2017

Prague 991.40 986.78 +0.47 +7.57 % % Budapest 35520. 35615. -0.27% +10.9 30 00 9% Warsaw 2294.7 2300.7 -0.26% +17.8 8 4 1% Bucharest 8094.1 8079.2 +0.19 +14.2 8 3 % 4% Ljubljana 802.81 797.56 +0.66 +11.8 % 8% Zagreb 0.00 1888.5 +0.00 -100.0 7 % 0% Belgrade 711.62 709.41 +0.31 -0.80%

%

Sofia 710.28 711.12 -0.12% +21.1

2% BONDS

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

Republic

2-year 0.224 0.075 +083b +10bp ps s 5-year 0.101 -0.002 +017b +0bps

ps

10-year 1.07 0.046 +051b +4bps

ps Poland

2-year 1.881 -0.146 +248b -12bps

ps

5-year 2.733 -0.012 +280b -1bps

ps

10-year 3.397 -0.011 +283b -1bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interb ank

Czech Rep <PR 0.43 0.54 0.64 0

IBOR=>

Hungary <BU 0.21 0.23 0.25 0.15

BOR=>

Poland <WI 1.752 1.776 1.828 1.73

BOR=>

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

(Additional reporting by Bartosz Chmielewski in Warsaw; editing