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CEE MARKETS-Forint opens week lower, all eyes on central bank

BUDAPEST, Sept 18 (Reuters) - The forint opened the week a touch weaker, with investors positioning for the Hungarian central bank's meeting on Tuesday where it is expected to loosen monetary conditions further against the backdrop of benign inflation. The forint has lost more than 2 percent of its value since late August after the National Bank of Hungary flagged another round of easing. In a Sept. 11-13 Reuters survey, all analysts said the bank would keep its base rate unchanged at a record-low 0.9 percent . But several analysts said it could ease policy further rate further into negative territory from the current -0.05 percent. "The NBH is widely expected to deliver some easing measures," Bank of America Merrill Lynch said in a note. "We now expect the NBH to also cut the overnight deposit rate by 10bp to -0.15 percent ... consistently dovish messages from the NBH and increasing consensus expectations for a rate cut in the past week suggest that it will be difficult for the central bank to not deliver." At 0811 GMT the forint was down 0.1 percent at 309.50 to the euro, erasing gains achieved earlier this year, and underperforming the Polish zloty and the Czech crown so far this year. Hungarian government bond yields have dropped by more than 10 basis points since the end of August. Around the region, currencies were little changed in slow trade. BZ WBK analysts said Polish markets would be likely driven "The FOMC meeting will be probably the key event, with Fed likely to present lower expected path of future interest rates, but at the same time signaling the start of balance sheet reduction," they said. Stock markets across the region rose, with Warsaw leading gains, rising one percent. The Prague stock exchange touched a near 2-1/2-year high before giving up gains, making it the only stock market in Central Europe to trade marginally lower on Monday. The bourse was pulled lower by blue-chip CEZ as investors took profit after the utility stock hit its highest level since going ex-dividend at the end of June.

CEE MARKETS SNAPSH AT 1011 CET

OT CURRENCIES

Latest Previo Daily Change

us

bid close change in 2017 Czech crown 26.078 26.092 +0.06 3.56% 0 5 % Hungary 309.50 309.33 -0.05% -0.22% forint 00 00 Polish zloty 4.2810 4.2787 -0.05% 2.87% Romanian leu 4.5998 4.6010 +0.03 -1.41%

%

Croatian 7.4840 7.4795 -0.06% 0.95%

kuna

Serbian 119.05 119.08 +0.03 3.61% 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 1051.0 1051.0 +0.00 +14.04 4 7 % % Budapest 38429. 38325. +0.27 +20.08 17 93 % % Warsaw 2522.8 2498.3 +0.98 +29.52 9 2 % % Bucharest 8055.8 8013.3 +0.53 +13.70 5 2 % % Ljubljana 800.93 800.80 +0.02 +11.61 % % Zagreb 1807.5 1821.4 -0.76% -9.39% 7 3 Belgrade 729.55 730.05 -0.07% +1.70% Sofia 669.33 680.83 -1.69% +14.14

% BONDS

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

Republic

2-year 0.011 -0.044 +070b -4bps

ps

5-year 0.185 0 +047b +1bps

ps

10-year 0.995 0.01 +056b +1bps

ps Poland

2-year 1.734 0 +242b +0bps

ps

5-year 2.573 -0.002 +286b +1bps

ps

10-year 3.22 -0.014 +279b -1bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interba nk

Czech Rep <PR 0.72 0.87 0.97 0

IBOR=>

Hungary <BU 0.105 0.115 0.14 0.12

BOR=>

Poland <WI 1.756 1.782 1.811 1.73

BOR=>

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

(Reporting by Reuters bureaux; Writing by Krisztina Than; Editing by Andrew Heavens)