WARSAW, Sept 30 (Reuters) - Central European currencies strengthened on Monday, at the beginning of a week when a European Union court ruling could have serious implications for Poland's financial markets. The European Court of Justice will rule on Thursday on whether a bank in Poland broke the law by selling homeowners a Swiss franc mortgage. The ruling could unleash lawsuits that wipe out Polish banking profits for years to come. "We approach the (zloty) supports at 4.37 and basically all of the most interesting things are ahead of us on Oct. 3, so I think the market is still in wait-and-see mode," said a Warsaw-based currency trader. "There is a small wave of optimism but no major moves." The Polish zloty was up 0.16% against the euro at 4.374. The Hungarian forint, the region's worst- performing currency, strengthened 0.15% to 334.6. The Czech crown gained 0.14% at 25.82. The forint was following the zloty in the absence of a strong local story, a Budapest trader said, adding that the broader direction was likely to be further weakening. PKO Bank Polski analysts said they expected the zloty to weaken to 4.45 by the end of the week, saying the worst possible verdict in the court case had not been priced in. Late on Friday, Fitch affirmed Poland at "A-" with a stable outlook, as expected. The agency pointed to Poland's "diversified economy, EU membership, strong macroeconomic fundamentals and a sound policy framework supported by a stable banking sector", but said it expects the deficit to widen as the government increases social spending. Polish bond yields ticked higher across the curve, with the 10-year paper trading 1.4 basis points higher at 2.015%. "Polish 10Y bond yield reached 2% support level and we expect the down trend might decelerate in the short term," Santander Bank Polska analysts said in a note. "The uncertainty related to the impact of the ECJ verdict on the Polish banks could weigh on the domestic bonds but the front end could outperform thanks to the CPI release." Poland will release flash CPI data on Tuesday, with analysts expecting year-on-year price growth to slow to 2.75% from 2.9% in August, according to a Reuters poll. Czech 10-year yields rose 0.9 basis points to 1.349% Stocks were mostly lower, with benchmark indices in Warsaw and Budapest down 0.72% and 0.44% respectively. CEE SNAPSHOT AT MARKETS 1112 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech 25.8200 25.8550 +0.14% -0.44% crown Hungary 334.6000 335.1000 +0.15% -4.04% forint Polish 4.3740 4.3810 +0.16% -1.93% zloty Romanian 4.7505 4.7539 +0.07% -2.03% leu Croatian 7.4100 7.4095 -0.01% +0.00% kuna Serbian 117.4000 117.4800 +0.07% +0.77% dinar Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1038.00 1038.450 -0.04% +5.21% 0 Budapest 40712.43 40890.74 -0.44% +4.02% Warsaw 2170.64 2186.31 -0.72% -4.66% Bucharest 9606.06 9603.38 +0.03% +30.10% Ljubljana 855.15 855.86 -0.08% +6.33% Zagreb 1970.28 1978.73 -0.43% +12.66% Belgrade <.BELEX15 750.61 755.41 -0.64% -1.45% > Sofia 571.60 574.60 -0.52% -3.85% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=RR 1.2960 0.0560 +205bps +5bps > 5-year <CZ5YT=RR 1.1020 -0.0890 +189bps -10bps > 10-year <CZ10YT=R 1.3490 0.0090 +190bps -1bps R> Poland 2-year <PL2YT=RR 1.5090 0.0130 +226bps +1bps > 5-year <PL5YT=RR 1.8080 0.0150 +259bps +1bps > 10-year <PL10YT=R 2.0150 0.0140 +257bps -1bps R> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep < 2.16 2.09 2.13 2.16 PRIBOR=> Hungary < 0.28 0.33 0.37 0.21 BUBOR=> Poland < 1.73 1.70 1.67 1.72 WIBOR=> Note: FRA are for ask prices quotes ************************************************** ************ (Reporting by Alan Charlish in Warsaw and Marton Dunai in Budapest)
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