Bonds News

CEE MARKETS-Forint slips more, O2 shares buoy Prague stock market

PRAGUE, Nov 11 (Reuters) - The Hungarian forint eased to its lowest point in nearly five weeks against the euro on Monday, continuing a week-long slide along with other central European currencies as global concerns reduce the market’s appetite for riskier assets.

Stock markets were mixed, with international investors cautious about world news including the latest news on protests in Hong Kong and as they wait for clearer signs of progress in U.S.-China trade talks.

Prague stocks were propped up by a rise in shares in telecoms group O2 Czech Republic, which are at their highest level since before the company started acquiring more of its own shares under a buyback programme at the end of August.

Budapest’s index fell 0.7%, while Warsaw was closed for a national holiday. Poland’s zloty lost 0.2% to 4.274 to the euro.

The forint slipped 0.2% to bid at 334.25 to the euro, falling more due to a determined ultra-dovish stance from the central bank even as inflation picks up.

Erste Bank said pressure could stay on the forint, hurt also by the increasing amount of forint liquidity the central bank has made available via forex swaps in the past three weeks.

Romania’s leu steadied on Monday after recent falls as the country’s assets see more pressure from budget deficit worries.

The Romanian currency, like the forint, has weakened since the summer months while the zloty and Czech crown have firmed.

Elsewhere, data showing inflation stagnated in the upper end of the Czech central bank’s target range failed to move the crown. Inflation in central Europe has stayed high amid home-grown economic growth safeguarding the region for now from a slowdown in western Europe.

Czech rate setters have continued to discuss more rate hikes even as central banks elsewhere around the world shift to easing policy.

The crown is sitting near its strongest level since July but was bid down 0.1% at 25.51 to the euro on Monday.

“It is a slow start to trading. The crown is tracking the region,” a Prague trader said. The trader added that the crown was unlikely to ease too much in the coming days.

Erste said investors would likely keep a close eye on preliminary gross domestic product figures coming on Thursday.

“Despite all the odds stemming from the worsening external environment and the recent weakening of market sentiment, we expect the region to remain relatively strong,” its analysts said.

Reporting by Jason Hovet; Editing by Hugh Lawson