×

CEE MARKETS-Currencies ease as Fed seen tightening policy further

* Forint, zloty ease as dollar interest rates are seen rising

* Investors hold breath ahead of Wednesday's Fed comments

* Foreign investors increase their Hungarian bond holding

BUDAPEST, March 20 (Reuters) - Central European currencies mostly eased slightly on Tuesday ahead of a two-day meeting at which the Federal Reserve is expected to lift interest rates, making assets in emerging markets relatively less attractive. The forint and the zloty eased by about 0.1 percent against the euro by 0946 GMT, with the latter trading near 3-month lows. Government bonds and stocks were mixed and rangebound. "A rate hike by the Fed on Wednesday looks a done deal. Their comments about the future will be more interesting," one Budapest-based fixed income trader said. Budapest's main share index firmed half a percent, regaining some of the ground lost on Monday, but the region's stocks remained fragile ahead of the Fed meeting. Fresh figures released in Budapest showed continuing double-digit growth in wages in January. The data and retail and industrial output figures released earlier show that annual economic growth could have exceeded a robust 5.5 percent in the first month of the year, Takarekbank analyst Gergely Suppan said in a note. A rise in foreign investors' Hungarian government bond holdings this month indicates that they are not particularly concerned about the outcome of Hungary's elections on April 8, the fixed-income trader said. Some uncertainty was felt in the market after a candidate supported by the fragmented opposition shocked by winning a mayoral by-election late last month in the southern city Hodmezovasarhely. But opinion polls still show that the ruling conservative Fidesz party leads by a wide margin and the main opposition parties failed to forge an alliance at talks in the past few days. The Czech crown marginally firmed, after it got support from two central bankers who said in the past days that interest rates could rise further despite a retreat in inflation in most of the region in February. The dinar hovered around Monday's closing levels. Raiffeisen reiterated its "buy" recommendation for dinar-denominated government bonds in a note, and its analyst Stephan Imre said 10-year bonds offered at an auction on Tuesday could draw sufficient demand. "We are currently revising our base rate projections for Serbia and tend to expect more (interest rate cuts) to come," he added. Serbia's central bank cut its benchmark interest rates last week, reacting to a strengthening dinar and a decline in inflation.

CEE SNAPSHOT AT MARKETS 1046 CET

CURRENCI ES

Latest Previous Daily Change bid close change in 2018 Czech <EURCZK= 25.4300 25.4370 +0.03% +0.44% crown > Hungary <EURHUF= 311.2500 311.0400 -0.07% -0.11% forint > Polish <EURPLN= 4.2231 4.2190 -0.10% -1.11% zloty > Romanian <EURRON= 4.6670 4.6660 -0.02% +0.27% leu > Croatian <EURHRK= 7.4400 7.4353 -0.06% -0.13% kuna > Serbian <EURRSD= 118.3500 118.2600 -0.08% +0.13% dinar > Note: calculated from 1800 CET

daily change

Latest Previous Daily Change close change in 2018 Prague 1120.94 1116.690 +0.38% +3.97%

0

Budapest 37902.90 37689.09 +0.57% -3.74% Warsaw 2243.78 2248.53 -0.21% -8.83% Bucharest 8723.91 8775.38 -0.59% +12.51% Ljubljana <.SBITOP 823.41 825.29 -0.23% +2.11% > Zagreb 1847.14 1847.61 -0.03% +0.23% Belgrade <.BELEX1 745.91 748.51 -0.35% -1.83%

5>

Sofia 669.97 671.80 -0.27% -1.10%

BONDS

Yield Yield Spread Daily (bid) change vs Bund change

in

Czech spread

Republic

2-year <CZ2YT=R 0.8820 0.0360 +146bps +4bps

R>

5-year <CZ5YT=R 1.3210 0.0500 +135bps +4bps

R>

10-year <CZ10YT= 1.9700 0.0140 +139bps +0bps

RR> Poland

2-year <PL2YT=R 1.5370 0.0080 +212bps +1bps

R>

5-year <PL5YT=R 2.4410 0.0090 +247bps +0bps

R>

10-year <PL10YT= 3.2960 0.0310 +271bps +1bps

RR>

FORWARD RATE AGREEMEN

T

3x6 6x9 9x12 3M

interban k

Czech Rep 0.96 1.07 1.22 0.90

<PRIBOR=

>

Hungary 0.07 0.11 0.18 0.03 Poland 1.72 1.73 1.76 1.70

Note: FRA are for ask prices quotes

************************************************

*************

(Reporting by Sandor Peto, editing by Louise Heavens)