* Currencies ease, bonds mixed on hawkish Fed, reaction is
muted
* Czech central bank seen keeping rates on hold
* Zloty off 20-month high but Polish stocks hit 23-month
high
* Kuna steady though snap elections are possible in Croatia
By Sandor Peto
BUDAPEST, May 4 (Reuters) - Central European currencies
eased slightly on Thursday after hawkish comments from the
Federal Reserve and ahead of a likely decision by the Czech
central bank to keep interest rates on hold.
Central banks in the European Union's eastern wing have
shown no signs that a rebound in inflation since late 2016 could
prompt them to start reversing years of interest rate loosening
any time soon.
The Czech central bank (CNB), however, four weeks ago
removed its cap which had kept the crown weaker than
27 against the euro.
That could lift the crown by some 4 percent in the coming
year according to a Reuters poll, but speculative crown buying
positions worth tens of billions of euros built in the past
months may keep it volatile in the short term.
The crown eased a shade to 26.78 against the euro by 0832
GMT, retreating from two-week highs touched on Wednesday.
The Czech coalition government collapsed on Tuesday, but
investors continued to ignore politics in the Czech Republic
which is regarded as the region's safe-haven market.
Czech 10-year government bond yields have fallen since
Friday when JPMorgan added Czech papers to its GBI-EM index.
Raiffeisen analyst Gintaras Shlizhyus said in a note that
this added weight to their "hypothesis of likely more support
for CZK developing".
"The government resignation failed to impress financial
markets so any volatility from politics (is) unlikely to feed
into FX market at this stage," Shlizhyus added.
The kuna was steady at 7.4475 even though the
Croatian parliament started to discuss a no-confidence motion
against the finance minister on Wednesday that could force a
snap election.
The zloty shed 0.4 percent to 4.2157 against the
euro, but dealers said that was a natural correction after a
jump to 20-month highs on Wednesday in illiquid international
markets, when local exchanges were closed due to a national
holiday.
The overall sentiment, however, remained positive, indicated
by a 1 percent rise in Warsaw's main equities index to
a 23-month high, extending its gains so far this year to 24
percent.
Bank and energy stocks lifted the index even though
heavyweight copper producer KGHM's stocks shed 3
percent, with London copper prices stumbling.
Major banks in the region -- Czech Komercni and
Romanian BRD -- reported a jump in their
first-quarter earnings.
The leu was steady, but it stays near one-month
lows at 4.545 against the euro as investors remain worried over
a proposal to widen a draft bill on prison pardons to include
corruption offences.
CEE SNAPS AT 1032
MARKETS HOT CET
CURRENCIES
Lates Previ Daily Chang
t ous e
bid close chang in
e 2017
Czech crown 26.78 26.77 -0.02 0.85%
00 55 %
Hungary 312.3 311.9 -0.11 -1.11
forint 000 500 % %
Polish 4.215 4.200 -0.36 4.46%
zloty 7 7 %
Romanian 4.545 4.547 +0.0 -0.22
leu 0 4 5% %
Croatian 7.447 7.451 +0.0 1.44%
kuna 5 5 5%
Serbian 123.0 123.1 +0.1 0.28%
dinar 000 950 6%
Note: daily calculate previ close 1800
change d from ous at CET
STOCK
S
Lates Previ Daily Chang
t ous e
close chang in
e 2017
Prague 1002. 996.2 +0.6 +8.7
52 9 3% 8%
Budapest 32263 32077 +0.5 +0.8
.36 .72 8% 1%
Warsaw 2414. 2392. +0.9 +23.
80 09 5% 97%
Bucharest 8244. 8209. +0.4 +16.
37 88 2% 36%
Ljubljana 774.6 777.6 -0.38 +7.9
4 1 % 5%
Zagreb 1892. 1890. +0.1 -5.13
47 16 2% %
Belgrade <.BELEX15 714.8 719.9 -0.71 -0.35
> 5 7 % %
Sofia 668.8 664.7 +0.6 +14.
9 1 3% 06%
BONDS
Yield Yield Sprea Daily
d
(bid) chang vs chang
e Bund e in
Czech sprea
Republic d
2-year <CZ2YT=RR -0.09 0.086 +063 +8bp
> 1 bps s
5-year <CZ5YT=RR 0.045 0.002 +039 -2bps
> bps
10-year <CZ10YT=R 0.818 -0.00 +045 -4bps
R> 4 bps
Poland
2-year <PL2YT=RR 2.018 0.014 +274 +1bp
> bps s
5-year <PL5YT=RR 2.92 0.041 +327 +2bp
> bps s
10-year <PL10YT=R 3.495 0.033 +313 +0bp
R> bps s
FORWARD RATE AGREEMENT
3x6 6x9 9x12 3M
inter
bank
Czech Rep < 0.34 0.41 0.5 0
PRIBOR=>
Hungary < 0.25 0.35 0.46 0.16
BUBOR=>
Poland < 1.751 1.78 1.829 1.73
WIBOR=>
Note: FRA are for
quotes ask
prices
**************************************************
************
(Additional reporting by Luiza Ilie in Bucharest and Bartosz
Chmielewski in Warsaw; Editing by Toby Davis)