×

CEE MARKETS-Assets firm on strong GDP data, ahead of bond auctions

* Currencies, bonds and stocks mostly firm

* Romania, Hungary seen smoothly selling bonds at auctions

* Czech crown extends gains; GDP jump boosts rate hike odds

BUDAPEST, Aug 17 (Reuters) - Central European assets firmed on Thursday, after robust second-quarter economic output figures in the region and ahead of bond auctions in Budapest and Bucharest. In most regional countries, economic growth picked up from already strong levels in the first quarter, with Romania reporting the fastest annual growth at 5.9 percent. Risk appetite has also increased since last week, when tension between North Korea and the United States weighed on emerging market assets. The improved sentiment, helped by the good GDP figures, mostly pushed government bond yields slightly lower. Romanian bonds and the leu regained some ground after a decline on Wednesday when the strong figures boosted worries that the budget deficit and inflation could rise. "The rebound is in line with the region and the core markets in Europe," said one trader with a foreign bank in Bucharest. Romania auctions five-year bonds on Thursday. Hungary tenders 3-, 5- and 15-year bonds. Traders said Hungary could probably smoothly sell the bonds near the levels to which yields had fallen, amid buying mainly The 15-year bonds on offer traded at 3.66 percent, 3 basis points below Wednesday's fixing. Hungary reported 3.2 percent annual economic growth for the second quarter on Wednesday, a strong figure, but below analysts' expectations and a 4.2 percent first-quarter increase. "That underpinned expectations that Hungary's central bank will be the last in the region to tighten policy," one Budapest-based fixed income trader said. Early this month, the Czech central bank (CNB) became the first in the European Union since 2012 to lift interest rates. Wednesday's figures, which showed the strongest Czech quarter-on-quarter growth on record, fuelled expectations that the CNB could soon lift rates again. The Czech crown jumped after the figures, and slightly extended its gains on Thursday, trading at 26.031 at 0848 GMT. A firmer currency reduces inflation pressure and the need of the CNB to tighten policy further. "After the recent data a potential rate hike should be back on the table for Q4 of this year," said Komercni Banka dealer Dalimil Vyskovsky in a note. "The reaction of EURCZK yesterday was imminent, but still cannot be called a monetary tightening move," he added, referring to the possibility of another rate hike. Czech 3x6 forward rate agreements rose by 2 basis points early on Thursday, but were still only 9 basis points above the 3-month PRIBOR interbank rates, thus signalling less than a 50 percent chance of a CNB rate hike by November.

CEE MARKETS SNAPSH AT 1048 CET

OT CURRENCIES

Latest Previo Daily Change

us

bid close change in

2017

Czech crown 26.031 26.056 +0.10 3.75% 0 0 % Hungary 304.20 304.40 +0.07 1.52% forint 00 00 % Polish zloty 4.2540 4.2652 +0.26 3.52%

%

Romanian leu 4.5820 4.5850 +0.06 -1.03%

%

Croatian 7.3920 7.3925 +0.01 2.21% kuna % Serbian 119.25 119.35 +0.08 3.44% dinar 00 00 % Note: daily calculated previo close 1800 change from us at CET

STOCKS

Latest Previo Daily Change

us

close change in

2017

Prague 1038.4 1033.8 +0.44 +12.6 0 3 % 7% Budapest 37121. 36892. +0.62 +15.9 29 09 % 9% Warsaw 2358.5 2381.1 -0.95% +21.0 3 8 8% Bucharest 8343.8 8292.2 +0.62 +17.7 1 0 % 7% Ljubljana 804.81 805.20 -0.05% +12.1

5%

Zagreb 1897.7 1905.9 -0.43% -4.87% 0 6 Belgrade 719.91 718.19 +0.24 +0.35 % % Sofia 732.02 730.90 +0.15 +24.8 % 3%

BONDS

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

Republic

2-year 0 -0.026 +070b -4bps

ps

5-year 0.091 0.032 +034b +3bps

ps

10-year 0.877 0 +045b +1bps

ps Poland

2-year 1.851 -0.01 +255b -2bps

ps

5-year 2.721 0.017 +297b +2bps

ps

10-year 3.388 -0.006 +296b +0bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interb ank

Czech Rep <PR 0.58 0.69 0.79 0

IBOR=>

Hungary <BU 0.23 0.295 0.365 0.15

BOR=>

Poland <WI 1.763 1.805 1.842 1.73

BOR=>

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

(Additional reporting by Radu Marinas in Bucharest and Robert Muller in Prague; editing by Andrew Roche)