December 13, 2013 / 4:31 PM / 4 years ago

CEE MARKETS 2-MOL lifts Hungarian shares on North Sea deal

(Adds central bank meetings, fresh prices)
    * Oil group MOL enters North Sea, lifts Hungarian stocks
    * Equities, currencies mixed, Hungary and Serbia seen
cutting rates

    By Sandor Peto
    BUDAPEST, Dec 13 (Reuters) - Oil and gas group MOL 
led Hungarian stocks higher on Friday after the company bought
oil and gas projects in the North Sea from BASF.
    Central European equity and currency markets were mixed,
with the forint regaining some ground after falls caused by an
expected Hungarian central bank rate cut and a court decision
that may hit commercial banks' bottom line.
    The $375 million North Sea acquisition gives MOL resources
in a secure area, something it needs. INA, the Croatian
oil and gas company in which MOL owns a stake of almost 50
percent, has had to shut down operations in Syria.
    MOL is also locked in a dispute over control of INA with the
Croatian government, which owns a stake in INA as well. MOL has
said selling its INA stake was an option if no deal was reached.
    The North Sea deal also reflects Central Europe's drive to
cut dependence on Russian oil and gas after the collapse of the
European Union-backed Nabucco gas project. 
    MOL shares rose 3.4 percent on the acquisition news, helping
the Budapest bourse's main index to rise 1 percent.
    Elsewhere in the region, Polish and Czech shares dropped,
while Bucharest firmed.
    Concorde Securities raised its target price for MOL shares
to 18,500 forints from 18,300, a 30 percent upside, saying that
the North Sea deal opened the way for MOL to a stable region
with good infrastructure as well as tax allowances.
    "Furthermore, the North Sea acquisition makes MOL able to
have access to upcoming UK Exploration Bid Rounds with further
potential value creation, and form strategic cooperation with
Wintershall for joint E&P expansion in the North Sea and the
Middle East regions, and other reputable operators such as TAQA,
Premier Oil and EnQuest," Concorde analyst Attila Vago said.
    
    NEW RATE CUTS
    Most central banks in the region are still in easing mode
after two years of rate cuts to help a slow recovery from
recession.
    Hungary and Serbia's central banks are expected to cut rates
further on Tuesday but the U.S. Federal Reserve may signal a day
later that it could start to cut back its monetary stimulus,
which has buoyed risky assets globally.
    Expectations of a 20 basis point cut in the Hungarian
central bank's 3.2 percent base rate sent the forint into falls
against the euro, but on Friday it regained some ground, firming
0.4 percent, after hitting 8-month lows earlier this month.
    It has also seen wobbles due to concerns a ruling of the
country's top court due on Monday may cause further losses on
foreign currency lending to the country's heavily taxed banks.
    "We believe that market fears are broadly overpriced,"
Societe Generale economist Benoit Anne said in a note.
    Serbia's central bank is seen cutting its 10 percent key
rate by 25-50 basis points after a fall in annual inflation to
1.6 percent in November from 2.2 percent in October. The dinar
 eased 0.1 percent against the euro.  
    Weak domestic demand generally pushed inflation down in the
region. Hungary's inflation, also slashed by utility price cuts,
is near four-decade lows, and Prime Minister Viktor Orban said
on Friday the government was working on new price reductions.
    Inflation in Poland, the region's biggest economy, slowed to
a 5-month low in November, but the central bank is seen sticking
to its pledge to keep rates flat until June. 

                      CEE MARKETS SNAPSHOT AT 1643 CET
 ************************** CURRENCIES ************************
                             Latest  Previous   Daily   Change
                             bid     close      change  in 2013
 Czech crown                 27.519    27.489   -0.11%  -8.98%
 Hungarian forint           302.000   303.220  +0.40%  -3.66%
 Polish zloty                 4.178     4.179   +0.03%  -2.48%
 Romanian leu                 4.452     4.451   -0.01%   -0.19%
 Croatian kuna                7.625     7.638   +0.17%  -0.97%
 Serbian dinar              114.830   114.730    -0.09%   -2.20%
 Note: daily change calculated from previous close at 1700 GMT
 **************************** STOCKS **************************
                             Latest  Previous   Daily   Change
                                     close      change  in 2013
 Prague                      955.78    966.43   -1.10%  -7.98%
 Budapest                  18439.57  18281.35   +0.87%  +1.47%
 Warsaw                     2422.93   2440.61    -0.72%  -6.20%
 Bucharest                  6295.38   6272.47  +0.37%  +22.25%
 ***************************** BONDS **************************
                         Yield    Yield    Spread    Daily
                         (bid)    change   vs Bund   change in
 Czech Republic                                      spread
   2-year                0.174   +0.020    -7bps    +3bps
   5-year                0.827     0.000    0bps      0bps
  10-year                2.275   +0.008   +44bps    +2bps
 Hungary
   3-year                4.110    +0.010   +374bps   +1bps
   5-year                4.800    +0.030   +398bps   +3bps
  10-year                5.800   +0.010    +397bps   +2bps
 ******************* FORWARD RATE AGREEMENTS ******************
                              3x6     6x9    9x12  3M interbank
 Czech Rep                    0.360   0.360  0.380   0.38
 Hungary                      2.970   3.050  3.150   3.17
 Poland                       2.680   2.700  2.810   2.65
 Note: FRA quotes are for ask prices
 **************************************************************
 
 (Reporting by Reuters bureaus; Writing by Sandor Peto; Editing
by Andrew Heavens)

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