August 16, 2016 / 10:05 AM / 3 years ago

CEE MARKETS-Assets retreat with world markets despite Czech GDP surprise

* Forint and zloty come down from 4-month highs vs euro
    * Less risk appetite ahead of U.S. data
    * Czech GDP growth slows less than expected

    By Sandor Peto
    BUDAPEST, Aug 16 (Reuters) - The forint and the zloty
retreated on Tuesday alongside worldwide stock markets and as
receding U.S. interest rate hike expectations bolstered the
euro.
    Friday's robust second-quarter economic output figures from 
Central European states had helped the Hungarian and the Polish
currencies, the region's most liquid, rise to four-month highs.
    But sentiment turned on Tuesday with investors waiting for
U.S. inflation, housing and industrial output data due later in
the day.
    The euro touched 8-week highs against the dollar and
gained 0.1 percent against the zloty and 0.2 percent
versus the forint by 0912 GMT.
    The rally fizzled out despite Czech figures confirming that
its economic growth outpaced the euro zone, expanding 2.5
percent annually in the second quarter, down from 3 percent in
the first quarter, but above analysts' forecasts of 2.3 percent.
   
    "The euro firms against the dollar, euro assets are bought
now and it is also firming against emerging market currencies
like the forint and the zloty," one Budapest-based currency
dealer said.
    "Stock exchanges also opened slightly lower ... and also,
after a (forint) firming in the past one or two weeks, a
correction was in the cards," the dealer said.
    The crown was steady at 27.02 against the euro,
sticking at the floor at which the Czech central bank has
defended the currency since 2013.
    Household consumption was a major driver of Czech growth as
wages regionally have been increased to fight a labour drain
into Western European Union countries.
    Analysts said economic recovery in Germany as well as
government spending also helped growth, and the figures were
unlikely to trigger any change in Czech monetary policy.
    The Prague stock exchange's main index tracked a
retreat of European shares from Monday's seven-week highs. It
fell 0.3 percent, while the Budapest and Warsaw 
benchmark indexes dropped half a percent.
    Bucharest bucked the fall, with its main index 
rising 0.8 percent, helped higher by a 1.3 percent rise in Banca
Transilvania which reported record first-half profits
late on Monday. 
    Government bonds mostly also retreated in the region, with
yields rising by a few basis points. The yield on Poland's
10-year paper rose 5 basis points to 2.66 percent.
    
           CEE      SNAP   AT  1112            
           MARKETS  SHOT  CET           
                    CURRENCIES                 
                    Late  Prev  Daily   Change
                    st    ious          
                    bid   clos  change  in 2016
                          e             
 Czech     <EURCZK  27.0  27.0   +0.00   -0.08%
 crown     =>        200   200       %  
 Hungary   <EURHUF  309.  309.  -0.19%    1.53%
 forint    =>       9000  3250          
 Polish    <EURPLN  4.26  4.26  -0.10%   -0.25%
 zloty     =>         88    45          
 Romanian  <EURRON  4.45  4.45   +0.03    1.36%
 leu       =>         85    99       %  
 Croatian  <EURHRK  7.48  7.49   +0.23    2.10%
 kuna      =>         20    91       %  
 Serbian   <EURRSD  123.  123.  -0.02%   -1.26%
 dinar     =>       0200  0000          
 Note:     calcula  prev  clos  1800           
 daily     ted      ious  e at  CET     
 change    from                         
                    STOC                       
                    KS                  
                    Late  Prev  Daily   Change
                    st    ious          
                          clos  change  in 2016
                          e             
 Prague             858.  861.  -0.28%  -10.19%
                      88    30          
 Budapest           2772  2786  -0.53%   +15.89
                    1.20  8.79                %
 Warsaw    <.WIG20  1848  1857  -0.50%   -0.58%
           >         .44   .70          
 Buchares           6845  6789   +0.83   -2.27%
 t                   .32   .05       %  
 Ljubljan  <.SBITO  720.  715.   +0.66   +3.43%
 a         P>         04    34       %  
 Zagreb    <.CRBEX  1781  1786  -0.28%   +5.42%
           >         .22   .31          
 Belgrade  <.BELEX  626.  630.  -0.71%   -2.74%
           15>        42    87          
 Sofia     <.SOFIX  461.  461.   +0.04   +0.23%
           >          98    81       %  
                    BOND                       
                    S                   
                    Yiel  Yiel  Spread  Daily
                    d     d             
                    (bid  chan  vs      change
                    )     ge    Bund    in
 Czech                                  spread
 Republic                               
   2-year  <CZ2YT=  -0.1  -0.0   +043b    +1bps
           RR>        87    06      ps  
   5-year  <CZ5YT=  -0.0  -0.0   +045b    +1bps
           RR>         8    02      ps  
           <CZ10YT  0.33     0   +043b    +2bps
 10-year   =RR>        9            ps  
 Poland                                        
   2-year  <PL2YT=  1.64  -0.0   +227b    -1bps
           RR>         7    24      ps  
   5-year  <PL5YT=  2.08  0.03   +261b    +5bps
           RR>         1     9      ps  
           <PL10YT  2.66  0.03   +275b    +5bps
 10-year   =RR>        7     6      ps  
           FORWARD  RATE  AGREEMENT            
                    3x6   6x9   9x12    3M
                                        interba
                                        nk
 Czech     <CZKFRA  0.29  0.25    0.21        0
 Rep       ><PRIBO                      
           R=>                          
 Hungary   <HUFFRA  0.74   0.7    0.72     0.85
           ><BUBOR                      
           =>                           
 Poland    <PLNFRA  1.61  1.56    1.54     1.71
           ><WIBOR     5     5          
           =>                           
 Note:     are for                             
 FRA       ask                          
 quotes    prices                       
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 (Editing by Louise Ireland)
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