Wires

CEE MARKETS-FX dip, stocks gain amid growth worries and Middle East jitters

Marton Dunai

BUDAPEST, Jan 10 (Reuters) - The Hungarian forint led moderate easing in emerging European currencies on Friday as a combination of growth challenges, a slight rise in inflation and a loose monetary policy played on investors minds. The forint shed 0.3% against the euro, followed by a 0.2% dip in the Czech crown and a 0.1% easing of the zloty. Stock markets were up by about a third of a percent regionwide. Dealers said however that trading was lackluster and real money flows were yet to pick up in early 2020, and Middle East worries over U.S.-Iran tensions eased despite possible evidence of a Ukrainian jetliner shot down near Tehran. "We've seen the main events in Iran, and we've had the first reactions," a Budapest-based dealer said. "The market is in a wait and see position now, and we reckon neither side wants to escalate the conflict for now." Iran wants to handle black box recordings from a Ukrainian airliner that crashed, killing all 176 people aboard, after Canada and others said the plane was brought down by an Iranian missile, probably by mistake. Europe's top diplomats will meet on Friday to assess ways to guide the United States and Iran away from open conflict, knowing that a miscalculation from either side could leave the bloc facing a war and a serious nuclear proliferation crisis at its doorstep. "Iran cannot emerge a winner from this conflict and the U.S. has no interest in whipping up more of a storm either, so we expect no real effect on markets for now," the dealer said. Other factors to influence markets from next week are the impending signing of the U.S.-China trade deal and easing uncertainty over Brexit as Britain enters a transition period after leaving the European Union on Jan. 31. Later in the year most regional currencies are expected to weaken, a Reuters poll showed. The Czech crown's strong run to start 2020 is likely to reverse and the Hungarian forint will creep back toward record lows as economies slow. Markets did not deviate from recent trends. The forint remained firmly within its recent 331-335 EUR/HUF range. The crown remained near its 23-month high. Growth concerns could affect emerging markets this year, including on the eastern flank of Europe, with Hungary betting it would not be able to withstand the slowdown without fiscal stimulus. Prime Minister Viktor Orban flagged a new stimulus package on Thursday, to be detailed next month.

CEE SNAPSHOT ATMARKETS 1048 CET

CURRENCI ES

Latest Previous Daily Changebid close change in 2020Czech 25.2580 25.2210 -0.15% +0.69%

crown

Hungary 333.8000 332.8000 -0.30% -0.80%

forint

Polish 4.2485 4.2455 -0.07% +0.19%

zloty

Romanian 4.7785 4.7781 -0.01% +0.21%

leu

Croatian 7.4420 7.4453 +0.04% +0.05%

kuna

Serbian 117.5500 117.6200 +0.06% +0.02%

dinar

Note: calculated from 1800 CET

daily change

Latest Previous Daily Changeclose change in 2020Prague 1129.48 1126.660 +0.25% +1.24%

0

Budapest 45623.28 45493.15 +0.29% -1.00%Warsaw 2164.90 2157.61 +0.34% +0.69%Bucharest 9952.92 9939.58 +0.13% -0.24%Ljubljana 952.70 949.44 +0.34% +2.90%Zagreb 2029.49 2028.81 +0.03% +0.60%Belgrade <.BELEX15 797.85 800.22 -0.30% -0.48%>Sofia 577.56 577.72 -0.03% +1.66%

BONDS

Yield Yield Spread Daily(bid) change vs Bund change

in

Czech spread

Republic

2-year <CZ2YT=RR 1.8070 0.1190 +240bps +12bps>5-year <CZ5YT=RR 1.4600 -0.0340 +196bps -4bps>10-year <CZ10YT=R 1.6540 0.0330 +188bps +4bps

R> Poland

2-year <PL2YT=RR 1.5260 -0.0270 +212bps -2bps>5-year <PL5YT=RR 1.9400 -0.0050 +244bps -1bps>10-year <PL10YT=R 2.2580 -0.0160 +248bps -1bps

R>

FORWARD RATE AGREEMEN

T

3x6 6x9 9x12 3M

interban k

Czech Rep < 2.25 2.26 2.25 2.17

PRIBOR=>

Hungary < 0.25 0.33 0.42 0.16

BUBOR=>

Poland < 1.75 1.75 1.78 1.71

WIBOR=> Note: FRA are for ask prices quotes

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(Reporting by Marton Dunai Editing by Mark Heinrich)