Wires

CEE MARKETS-Warsaw stocks jump after worst-ever drop as markets rebound

Jason Hovet

(Updates stock gains, Romania politics, details) PRAGUE, March 13 (Reuters) - The hardest-hit central European stock markets recovered some losses on Friday, with Warsaw blue-chips on track for their biggest jump since 2009 a day after posting their worst-ever fall to an 11-year low. The WIG20 index was up 6.7% at 1438 GMT, winning back half its drop on Thursday and cutting losses over the last three weeks to 34%. Budapest rose 4.9% and Prague gained 2.7%. Currencies also clawed back ground as the Czech crown firmed 0.2% to 26.144 to the euro after dropping over 2% on Thursday amid market turmoil caused by economic worries from the coronavirus outbreak. The fall was its biggest one-day drop since the Czech central bank launched a currency intervention regime in 2013 as part of its monetary policy. Markets on Friday started slightly rolling back the pricing in of aggressive Czech rate cuts over the next year although still firmly see a hike at the next meeting on March 26. Last month the Czech central bank delivered its ninth rate hike since 2017, and Governor Jiri Rusnok said this week there was not an acute need for easing yet. While until recently markets were expecting a hawkish turn from the region's central banks as policymakers dealt with persisting domestic inflationary pressures amid slowing growth, many see rate cuts coming down the line amid the coronavirus outbreak. Polish markets price in chances of more than two cuts in the next year. Poland's zloty inched 0.1% lower on Friday. Hungary's forint gained 0.1% to 338.75 to the euro. The Romanian leu was also a touch higher, at 4.822 per euro, amid attempts to get a new government that can fully tackle the spreading coronavirus outbreak. Romania's centrist President Klaus Iohannis on Friday asked interim Prime Minister Ludovic Orban to form a government and get a parliamentary vote of confidence as early as Saturday. Orban said earlier in the day that he and his entire cabinet would quarantine themselves after coming into contact with a senator who was later confirmed to have the coronavirus.

Analysts and market players are expecting volatility to continue as investors wait for policymakers to step up their response to the virus. Global hopes of that boosted the market on Friday. "The (Hungarian central bank) is expected to inject significant liquidity into the banking system at its next weekly tender on Monday if needed, which could weaken the forint slightly," Equilor brokerage said in a morning note. While central Europe has fewer confirmed cases of the new virus than in its western neighbors, the region's governments have taken some of the swiftest steps to contain the spread, including curbing or controlling international travel to their countries, closing most schools and banning large gatherings. The Czech government on Friday imposed a ban on foreigners entering the country and Czechs traveling abroad as of Monday.

CEE SNAPSHO

MARKETS T CURRENC IES

Latest Previou Daily Change

s

bid close change in 2020EURCZK Czech <EURCZK 26.1440 26.1955 +0.20% -2.72%= crown =>EURHUF Hungary <EURHUF 338.750 339.015 +0.08% -2.25%= forint => 0 0EURPLN Polish <EURPLN 4.3700 4.3645 -0.13% -2.60%= zloty =>EURRON Romanian <EURRON 4.8220 4.8250 +0.06% -0.70%= leu =>EURHRK Croatian <EURHRK 7.5650 7.6050 +0.53% -1.58%= kuna =>EURRSD Serbian <EURRSD 117.630 117.665 +0.03% -0.05%= dinar => 0 0Note: calcula 1800daily ted CETchange fromLatest Previou Daily Change

s

close change in 2020.PX Prague 837.45 815.740 +2.66% -24.93%

0

.BUX Budapest 33888.5 32317.8 +4.86% -26.46%8 9.WIG20 Warsaw <.WIG20 1392.67 1305.73 +6.66% -35.23%>.BETI Buchares 8086.83 7950.02 +1.72% -18.95%

t

.SBITO Ljubljan <.SBITO 761.38 753.70 +1.02% -17.77%P a P>.CRBEX Zagreb <.CRBEX 1512.59 1429.47 +5.81% -25.02%>.BELEX Belgrade <.BELEX 714.24 726.17 -1.64% -10.91%15 15>.SOFIX Sofia <.SOFIX 448.11 457.61 -2.08% -21.13%>Yield Yield Spread Daily(bid) change vs Bund change

in

Czech spread

Republic

CZ2YT= 2-year <CZ2YT= 1.6670 0.0480 +259bp +3bpsRR RR> sCZ5YT= 5-year <CZ5YT= 1.5100 0.0380 +230bp -6bpsRR RR> sCZ10YT <CZ10YT 1.1040 0.0000 +170bp -15bps=RR 10-year =RR> s

Poland

PL2YT= 2-year <PL2YT= 1.4530 0.0850 +238bp +6bpsRR RR> sPL5YT= 5-year <PL5YT= 1.7880 0.0460 +258bp -5bpsRR RR> sPL10YT <PL10YT 1.8330 0.0000 +243bp -15bps=RR 10-year =RR> s

FORWARD

3x6 6x9 9x12 3M

interba nk

Czech <CZKFRA 1.83 1.40 1.22 2.32Rep ><PRIBO

R=>

Hungary <HUFFRA 0.64 0.70 0.80 0.66><BUBOR

=>

Poland <PLNFRA 1.40 1.17 1.11 1.69><WIBOR

=> Note: FRA quotes are for ask prices

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(Reporting by Jason Hovet in Prague, Krisztina Than in Budapest and Alan Charlish in Warsaw; editing by Nick Macfie)