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CEE MARKETS-Polish stocks hit multi-year high, Eurocash woes slow rally

* Warsaw's bluechip stock index highest since May 2015

* Eurocash hit from tax fraud slows Polish stocks rally

* Forint reverses fall after central bank talks it down

BUDAPEST, Aug 25 (Reuters) - Polish stocks hit multi-year highs on Friday even though the rally was slowed by wholesale group Eurocash's announcement it had been hit by tax fraud. Warsaw is Central Europe's best performing stock exchange this year. Its bluechip index has gained more than 26 percent since 2016. Polish shares are picking up after underperforming regional peers last year when the policies of the conservative Law and Justice Party (PiS), which took power in late 2015, hit various sectors including banks. Its policies have become less painful to businesses, even though Polish assets repeatedly came under pressure this year from politics, including tension with Brussels over judiciary reform and a plan to help FX borrowers at the cost of banks. Central Europe's robust economic performance still buoys its currencies and equities. Polish consumer confidence hit an all-time high in August according to late Thursday's data. The healthy outlook has opened the way for more gains on the Polish bourse after the past few weeks' global worries over tension between North Korea and the United States eased, analysts said. After a rally on Thursday, Warsaw's bluechip index hit its highest level since May 2015 on Friday. The index which also takes dividends into account set a 10-year high. The .WIG20 stood higher by 0.2 percent at 0912 GMT at 2,461 points, driven off the day's peaks by a retreat of some bank stocks and a 4 percent plunge of Eurocash . The wholesale group's shares tumbled after it said that it had been cheated in a VAT fraud and might be obliged to refund tax to the state, reducing its profit by 114 million zlotys ($31.57 million). Hungarian stocks were treading water, after Budapest's main equities index hit a record high on Thursday. The forint was steady at 304.29 against the euro, off Thursday's two-week lows at 304.82, and Hungarian government bond yields rose 1-2 basis points after 10 basis point fall on Thursday. The forint plunged one percent on Thursday from 28-month highs of 301.72 after the Hungarian central bank flagged further monetary easing on comments to Reuters, which market participants said was verbal intervention to stem the gains of the forint. Dealers said the forint may resume it firming trend. "Has anything changed fundamentally?," one Budapest-based dealer said. "With the current domestic macroeconomic and international backdrop, a firming is natural... Possible exotic options barriers near the 300 level also keep people excited."

CEE MARKETS SNAPSH AT 1112 CET

OT CURRENCIES

Latest Previo Daily Change

us

bid close change in

2017

Czech crown 26.098 26.106 +0.03 3.48% 0 5 % Hungary 304.29 304.42 +0.04 1.49% forint 00 50 % Polish zloty 4.2614 4.2622 +0.02 3.34%

%

Romanian leu 4.5890 4.5836 -0.12% -1.18% Croatian 7.3950 7.4135 +0.25 2.16% kuna % Serbian 119.13 119.26 +0.11 3.54% 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 1035.3 1034.1 +0.11 +12.3 0 5 % 4% Budapest 37996. 37954. +0.11 +18.7 01 41 % 3% Warsaw 2460.8 2456.2 +0.19 +26.3 4 7 % 3% Bucharest 8373.0 8348.7 +0.29 +18.1 8 6 % 8% Ljubljana 829.14 828.68 +0.06 +15.5 % 5% Zagreb 1902.5 1903.4 -0.05% -4.63% 1 7 Belgrade 722.11 722.78 -0.09% +0.66

%

Sofia 717.18 718.44 -0.18% +22.3

0% BONDS

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

Republic

2-year -0.021 0.005 +070b -1bps

ps

5-year 0.087 0.047 +039b +3bps

ps

10-year 0.902 -0.031 +050b -5bps

ps Poland

2-year 1.74 -0.007 +247b -2bps

ps

5-year 2.64 0.013 +294b +0bps

ps

10-year 3.316 0.015 +292b -1bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interb ank

Czech Rep <PR 0.6 0.71 0.81 0

IBOR=>

Hungary <BU 0.19 0.25 0.31 0.15

BOR=>

Poland <WI 1.764 1.79 1.84 1.73

BOR=>

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

(Additional reporting from Warsaw editorial Editing by Jeremy Gaunt.)