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CEE MARKETS-BZ WBK bank deal boosts Polish stocks, currencies ease

* Polish BZW buys Deutsche Bank's local unit, its shares jump

* Polish bank stocks approach 2-and-1/2-year high

* CEE currencies ease despite Fed caution over rate hikes

* Crown eases, Czech current account surplus higher than expected

BUDAPEST/WARSAW, Dec 14 (Reuters) - Warsaw stocks were driven higher by bank shares on Thursday after Poland's third-largest lender, Bank Zachodni WBK, signed a deal to buy Deutsche Bank's Polish assets. The 1.29 billion zloty ($362 million) deal fits into a consolidation of the bank sector in Central Europe's biggest economy, marked with mergers and acquisitions. Polish banks improved their profitability this year even though central bank rates are at record lows, with their net interest income rising 11 percent in annual terms in the January-October period. BZ WBK shares jumped by more than 5 percent after the announcement of the deal. The index of Warsaw-listed banks stocks rose 0.9 percent, approaching the 2-1/2-year high reached late last month, while Warsaw's bluechip index was up 0.6 percent at 1013 GMT. Bank stocks firmed despite surprisingly dovish comments from Polish central bank rate setter Grazyna Ancyparowicz, who told Reuters on Wednesday the latest pick-up in inflation was caused "Her comment ... confirms that one should not include her in the group of policy hawks despite earlier pronouncements allowing for a rate hike in the course of 2018," BZ WBK said in a note. The comments helped push the zloty to its weakest level since Nov. 21 against the euro. Trading at 4.222, it was down 0.1 percent, leading a weakening of most currencies in the region. The region's currencies and government bonds failed to benefit from Wednesday's Federal Reserve comments, which tempered expectations for future interest rate tightening in the U.S., weighing on the dollar. Dollar selling often help assets in Central Europe fast-growing emerging economies. But the recent, relatively moderate inflation figures in most of the region led to the view that its central banks will not rush into monetary tightening. Even the Czech central bank (CNB) which has raised interest rates twice since August is unlikely to touch rates again at its meeting next week, even though inflation is above its 2 percent target. A report on the Czech car industry on Thursday added to signs that the economy is booming. Czech manufacturers are set to produce a record 1.4 million vehicles in 2017, the CTK news agency said. Other figures showed that the economy, which grew 5 percent in annual terms in the third quarter, remains balanced, with the Czech current account posting a higher-than-expected 14.99 billion crown surplus in October. The crown eased 0.1 percent to 25.68 versus the euro.

CEE MARKETS SNAPSH AT 1113 CET

OT CURRENCIES

Latest Previo Daily Change

us

bid close change in

2017

Czech crown 25.680 25.661 -0.07% 5.17% 0 0 Hungary 314.15 314.08 -0.02% -1.70% forint 00 50 Polish zloty 4.2220 4.2167 -0.13% 4.31% Romanian leu 4.6330 4.6317 -0.03% -2.12% Croatian 7.5450 7.5479 +0.04 0.13% kuna % Serbian 119.11 119.37 +0.22 3.56% 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 1063.5 1059.9 +0.34 +15.4 1 2 % 0% Budapest 38307. 38228. +0.21 +19.7 33 16 % 0% Warsaw 2423.7 2409.4 +0.59 +24.4 3 6 % 3% Bucharest 7525.1 7546.0 -0.28% +6.21 5 7 % Ljubljana 786.52 784.42 +0.27 +9.61 % % Zagreb 1857.2 1857.5 -0.02% -6.90% 1 3 Belgrade 746.29 744.07 +0.30 +4.03 % % Sofia 663.58 666.74 -0.47% +13.1

6% BONDS

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

Republic

2-year 0.24 0 +097b -1bps

ps

5-year 0.707 -0.058 +104b -7bps

ps

10-year 1.469 0.045 +114b +4bps

ps Poland

2-year 1.66 0.133 +239b +12bp ps s 5-year 2.638 0.008 +297b -1bps

ps

10-year 3.246 0 +292b -1bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interb ank

Czech Rep <PR 1.06 1.25 1.39 0

IBOR=>

Hungary <BU 0.085 0.135 0.205 0.03

BOR=>

Poland <WI 1.761 1.805 1.904 1.72

BOR=>

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

(Reporting by Sandor Peto; Editing by Hugh Lawson)