CEE MARKETS-Prague stocks set 6-year high, zloty shrugs off EU threat

* Prague stocks lead regional rise, set 6-year high

* Brussels may propose Poland should lose EU voting rights

* Polish assets shrug off Brussels threat, economy is robust

* Romanian lawmakers seen passing rest of courts reform, leu eases

BUDAPEST/BUCHAREST, Dec 20 (Reuters) - Prague led Central European stock exchanges higher on Wednesday, with its main index setting a six-year high, after the U.S. Senate passed a sweeping tax reform. Expectations for tax stimulus in the world's biggest economy have buoyed stock prices in the European Union's fast-growing emerging markets in the past weeks. The region's bourses did not track a pullback from record highs in Wall Street, which also made German stocks retreat. "But you can feel the uncertainty," said Jozsef Miro, strategist of Erste. "In the past, (European and U.S.) stock markets had their own ways. Germany starting to correlate with Wall Street may not be a good sign," he added. Regional equities still extended their gains on Wednesday. Prague's main index set a 6-year high, and gained more than half a percent by 1011 GMT. Budapest and Bucharest were at their highest level since Nov. 29. Prague has been partly buoyed by gains of state-controlled energy group CEZ as wholesale power prices have risen. With 17 percent rise so far this year, Prague is still behind Warsaw and Budapest, which have gained 27 and 21 percent, respectively. Currencies were mixed against the euro. The forint and the leu shed, the Czech crown and the zloty gained 0.1 percent. Polish markets shrugged off the risk that the European Union may activate proceedings against Poland on Wednesday, bringing it closer to losing its voting rights in the bloc, due to accusations that Warsaw has weakened the rule of law.

However, it is very difficult to bring the unprecedented proceeding, which would punish Polish legislation including a judiciary reform, to the end. That would require unanimous consent from other EU members. "Even though the political storm is likely to continue, we expect the zloty to appreciate in the medium term due to robust economic growth, a tight labour market and increasing inflation, which are likely to affect the MPC's (central bank) position next year," Nordea analyst Natalia Kornela Setlak said. "Interest rate normalisation (rise) is approaching and we expect to see the first hike in late 2018," she said in a note. Hungary weakened its own constitutional court already years ago. An ongoing judicial reform is also a worry in Romania where it is seen hindering efforts to fight corruption. Lawmakers passed part of the reform on Tuesday and are expected to approve the rest late on Wednesday. The political risk may lead to some leu weakening, ING analysts said in a note.



Latest Previo Daily Change


bid close change in


Czech crown 25.670 25.693 +0.09 5.21% 0 0 % Hungary 313.18 312.88 -0.09% -1.39% forint 00 50 Polish zloty 4.1983 4.1999 +0.04 4.90%


Romanian leu 4.6250 4.6197 -0.11% -1.95% Croatian 7.5460 7.5443 -0.02% 0.12%


Serbian 119.20 119.00 -0.17% 3.48% dinar 00 00 Note: daily calculated previo close 1800 change from us at CET


Latest Previo Daily Change


close change in


Prague 1077.0 1071.2 +0.54 +16.8 2 4 % 6% Budapest 38855. 38807. +0.13 +21.4 85 09 % 1% Warsaw 2467.1 2455.9 +0.45 +26.6 0 9 % 5% Bucharest 7789.0 7769.4 +0.25 +9.94 6 4 % % Ljubljana 790.61 786.71 +0.50 +10.1 % 8% Zagreb 1846.6 1845.0 +0.09 -7.43% 7 8 % Belgrade 750.33 750.27 +0.01 +4.59 % % Sofia 662.37 662.80 -0.06% +12.9


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


2-year 0.526 0.186 +120b +17bp ps s 5-year 0.792 0.064 +106b +5bps


10-year 1.462 0.005 +109b +1bps

ps Poland

2-year 1.744 -0.022 +242b -4bps


5-year 2.661 -0.026 +293b -4bps


10-year 3.331 0.024 +296b +2bps



interb ank

Czech Rep <PR 1.04 1.24 1.38 0


Hungary <BU 0.03 0.13 0.19 0.03


Poland <WI 1.761 1.815 1.915 1.72


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

(Additional reporting by Jason Hovet in Prague)