×

CEE MARKETS-Leu rebounds after CPI jump, regional GDP data eyed

* Romania's inflation surges to 2.6 pct, leu off 5-year low CPI matches cbank forecast, but above analysts' projection

* CEE GDP data due Tuesday seen showing robust growth

* Forint soft, Hungarian c.bank seen easing policy further

BUDAPEST/BUCHAREST, Nov 10 (Reuters) - The leu rebounded from five-year lows against the euro on Friday after data showing Romanian inflation rose faster than expected in October, fuelling expectations for policy tightening from the central bank (NBR). Adding to signs of overheating in the Romanian economy, the country's inflation has been rapidly catching up with a rebound across Central Europe since mid-2016. The data comes ahead of the release by the region's biggest economies of third-quarter economic output figures on Tuesday, which are expected to show continuing robust growth. Central bank policy was also in focus in Hungary, where the forint softened on expectations the Hungarian central bank will ease policy further at its Nov. 21 meeting. The leu firmed 0.2 percent versus the euro by 0954 GMT, to trade at 4.637, off Thursday's five-year low of 4.649. Romania's annual inflation ran at 2.6 percent in October, compared with 1.8 percent in September and 1.2 percent in August. The rise is in line with Thursday's revised inflation forecast from the NBR for end-year inflation at 2.7 percent. The NBR, after its meeting on Tuesday, said that in future it would focus on keeping interest rates near its benchmark rate and be more flexible over the exchange rate. Governor Mugur Isarescu also said on Thursday that the leu's weakness reflected a widening of the country's trade deficit, but the currency was "relatively close" to its equilibrium levels. The bank's new policy will face a test later this year when government spending is expected to surge, increasing inflation pressures. "Whereas we would expect EUR/RON to stabilize around current levels, the latest move leaves the leu with a depreciation of 2.3 percent against the euro since the beginning of the year, despite strong economic conditions and a supportive global environment," Raiffeisen analysts said in a note. Romania's 10-year government bond yield continued to rise, yield gains across Europe amid a sell-off in German Bunds.

Hungarian yields also rebounded after a sharp decline to around record lows on Thursday, which pushed the country's 10-year yield below U.S. Treasuries. The forint eased 0.1 percent to 312.10 against the euro. Market participants said there was a slight chance that Fitch will improve Hungary's debt rating or its outlook in a review later on Friday.

CEE MARKETS SNAPSH AT 1054 CET

OT CURRENCIES

Latest Previo Daily Change

us

bid close change in

2017

Czech crown 25.533 25.542 +0.04 5.77% 0 5 % Hungary 312.10 311.66 -0.14% -1.05% forint 00 00 Polish zloty 4.2292 4.2324 +0.08 4.13%

%

Romanian leu 4.6370 4.6445 +0.16 -2.20%

%

Croatian 7.5367 7.5375 +0.01 0.24% kuna % Serbian 118.41 118.67 +0.22 4.17% 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 1062.3 1060.5 +0.17 +15.2 1 3 % 7% Budapest 39718. 40273. -1.38% +24.1 02 66 1% Warsaw 2461.5 2478.2 -0.67% +26.3 1 1 7% Bucharest 7776.1 7746.9 +0.38 +9.75 1 9 % % Ljubljana 792.97 788.58 +0.56 +10.5 % 0% Zagreb 1849.2 1848.4 +0.04 -7.30% 1 7 % Belgrade 737.33 734.99 +0.32 +2.78 % % Sofia 668.72 671.73 -0.45% +14.0

3% BONDS

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

Republic

2-year 0.37 0.034 +112b +3bps

ps

5-year 0.73 0 +108b +0bps

ps

10-year 1.64 0.041 +125b +3bps

ps Poland

2-year 1.624 0.014 +237b +1bps

ps

5-year 2.625 -0.004 +298b +0bps

ps

10-year 3.44 0.021 +305b +1bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interb ank

Czech Rep <PR 0.97 1 1.23 0

IBOR=>

Hungary <BU 0.09 0.09 0.14 0.03

BOR=>

Poland <WI 1.77 1.805 1.89 1.73

BOR=>

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

(Reporting by Sandor Peto; editing by Emelia Sithole-Matarise)