×

CEE MARKETS-Stocks rise, FTSE Russell to promote Poland to developed market

* Polish shares get help from FTSE Russell reclassification

* Renewed dlr strength keep fx under pressure despite good PMIs

* Hungarian bonds lead yields rise, tracking euro zone

* Crown hovers around 26/euro after robust PMI

BUDAPEST, Oct 2 (Reuters) - Central European equities rose on Monday, outperforming Western peers, after index provider FTSE Russell said it would promote Poland to a developed market from its advanced emerging class from next year. Strong Czech, Hungarian and Polish manufacturing indices (PMI) may have also provided some help to assets in the region. But demand for the region's currencies was reduced by a strengthening of the dollar, with Catalonia's independence vote weighing on the euro. FTSE Russel said late on Friday in its annual classification review that it would move Poland, Central Europe's biggest stock into the top group of its covered markets. Warsaw stocks rose 0.9 percent by 0935 GMT. Warsaw regained part of the ground lost last month due to worries over new proposals for judiciary reform. Politicians in Brussels and some EU capital have said the reforms could damage the rule-of-law in Poland. The zloty traded on the weaker side of the 4.3 psychological line against the euro at 4.3155, down 0.1 percent, near six-and-1/2-month lows touched last week. Poland reported a higher than expected PMI manufacturing index of 53.7 for September, underpinning that economic growth remains strong. But the zloty was unable to benefit from the good figures. Hungary, which calculates its own index with different methodology, reported an even higher figure, at 59.3. The forint firmed marginally and stays near its weakest levels against the euro since May. A new round of monetary easing measures launched last month has been keeping it under pressure. The measures pushed down Hungarian government debt yields to record lows, but a rise in debt yields in developed markets triggered profit-taking since last week, and Hungary's yields led a regional rise on Monday. Its 10-year papers traded at a yield of 2.65 percent, up 7 basis points from Friday's fixing. Budapest's stock index, meanwhile, rose by one percent, after Sandor Csanyi, the CEO of OTP said that the region's biggest independent lender planned to buy at least five banks in the next two years. Elsewhere, the Czech Republic also reported a strong PMI index at a higher-than-expected 56.6. The crown danced around the 26 psychological line against the euro, near its strongest levels since the central bank (CNB) removed a cap which had kept it weaker than 27. Expectations that the CNB will continue to lift its interest rates in November buoy the currency, but a huge amount of long crown positions held by foreigners keeps a lid on the unit.

CEE MARKETS SNAPSH AT 1135 CET

OT CURRENCIES

Latest Previo Daily Change

us

bid close change in

2017

Czech crown 25.970 25.994 +0.09 3.99% 0 5 % Hungary 311.35 311.41 +0.02 -0.81% forint 00 50 % Polish zloty 4.3155 4.3096 -0.14% 2.05% Romanian leu 4.5880 4.5999 +0.26 -1.16%

%

Croatian 7.4990 7.4925 -0.09% 0.75%

kuna

Serbian 119.06 119.20 +0.12 3.60% 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 1049.7 1045.1 +0.44 +13.9 3 7 % 0% Budapest 37663. 37290. +1.00 +17.6 36 65 % 9% Warsaw 2475.3 2453.4 +0.89 +27.0 9 6 % 8% Bucharest 7900.3 7877.9 +0.28 +11.5 7 2 % 1% Ljubljana 797.41 796.55 +0.11 +11.1 % 2% Zagreb 1820.6 1811.1 +0.53 -8.73% 3 2 % Belgrade 714.78 720.76 -0.83% -0.36% Sofia 691.08 688.11 +0.43 +17.8 % 5%

BONDS

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

Republic

2-year 0.231 0.034 +092b +5bps

ps

5-year 0.325 0.066 +060b +7bps

ps

10-year 1.289 0.082 +083b +8bps

ps Poland

2-year 1.778 0.002 +247b +1bps

ps

5-year 2.715 0 +299b +1bps

ps

10-year 3.38 0 +292b +0bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interb ank

Czech Rep <PR 0.72 0.87 0.97 0

IBOR=>

Hungary <BU 0.09 0.13 0.18 0.03

BOR=>

Poland <WI 1.79 1.819 1.91 1.73

BOR=>

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

(Additional reporting by Warsaw bureau; Editing by Alison Williams)