July 6, 2018 / 10:13 AM / 9 months ago

CORRECTED-CEE MARKETS-Trade war fears halt currency rebound

 (In paragraph 4, please read Romanian stocks set six-month lows
instead of highs)
    * Global trade war fears stoke market jitters
    * CEE FX recovery, dollar losing allure -Reuters polls

    By Sandor Peto
    BUDAPEST, July 6 (Reuters) - Central European currencies and
some regional stock markets fell on Friday, bringing the week's
rebound to an end after the United States slapped tariffs on
some Chinese goods.
    Fears of an escalating global trade war sent currencies down
0.1-0.2 percent against the euro by 0925 GMT, except for the
firming dinar.
    Assets in the region have been knocked down in the past few
months by a rallying dollar and U.S. debt yields, political
tension in European Union members Italy and Germany, and fears
that a trade war will slow global economic growth.
    As the Chinese central bank sought to calm markets this
week, a brief rebound in the yuan helped trigger a
bounce for the EU's eastern sector, sending Budapest's,
Prague's and Warsaw's stock indexes back to
mid-June levels, while Romanian stocks set six-month
    Those indexes were all off those levels on Friday, except
for Prague as Czech markets were shut for the Jan Hus holiday.
    "If the (U.S.-Sino) trade war continues, (the Chinese) are
likely to weaken it further," one dealer in Hungary said.
    The region's major automotive businesses, now growing at
about 4 percent annually, are particularly exposed to a
full-blown global trade war.
    Data from Hungary showing annual industrial output slowed
sharply to 0.4 percent in May put extra pressure on the forint.
The currency fell 0.2 percent to 324.10 versus the euro, having
fallen to record lows above 330 this week. Hungarian government
bond prices eased.
    "More robust growth can return in the next month as new car
models and capacities will step in and last year's base was weak
in the second half," Takarekbank analyst Andras Horvath said in
a note.
    Analysts said investors are eyeing June inflation figures,
due on Tuesday, which are seen showing the inflation rising
above the middle of the bank's 2-4 percent target. That was
adding to pressure on the forint.
    A Reuters poll of analysts published on Friday projected a
recovery in the forint, and some analysts did not rule out the
National Bank of Hungary launching some policy tightening
measures this year.
    A separate Reuters poll showed that the recent months-long
dollar rally could slow by next year. 
            CEE       SNAPSHOT   AT                         
            MARKETS             1125 CET            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2018
 Czech      <EURCZK=   25.9400   25.9200    -0.08%    -1.53%
 crown      >                                       
 Hungary    <EURHUF=  324.3500  323.6900    -0.20%    -4.14%
 forint     >                                       
 Polish     <EURPLN=    4.3635    4.3544    -0.21%    -4.29%
 zloty      >                                       
 Romanian   <EURRON=    4.6634    4.6610    -0.05%    +0.35%
 leu        >                                       
 Croatian   <EURHRK=    7.4170    7.3990    -0.24%    +0.18%
 kuna       >                                       
 Serbian    <EURRSD=  117.9500  117.9700    +0.02%    +0.47%
 dinar      >                                       
 Note:      calculated from               1800 CET          
                      Latest    Previous  Daily     Change
                                close     change    in 2018
 Prague                1077.56  1077.560    +0.00%    -0.06%
 Budapest             36237.73  36335.09    -0.27%    -7.97%
 Warsaw                2160.99   2156.59    +0.20%   -12.20%
 Bucharest             7843.49   7814.50    +0.37%    +1.16%
 Ljubljana  <.SBITOP    872.94    880.11    -0.81%    +8.25%
 Zagreb                1800.78   1799.80    +0.05%    -2.28%
 Belgrade   <.BELEX1    736.62    734.24    +0.32%    -3.05%
 Sofia                  631.06    629.51    +0.25%    -6.85%
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
 Czech                                              spread
   2-year   <CZ2YT=R    1.1690   -0.1080   +184bps    -10bps
   5-year   <CZ5YT=R    1.6100   -0.0120   +191bps     -1bps
   10-year  <CZ10YT=    2.2240    0.0300   +193bps     +3bps
   2-year   <PL2YT=R    1.6460   -0.0010   +232bps     +0bps
   5-year   <PL5YT=R    2.5360    0.0070   +283bps     +1bps
   10-year  <PL10YT=    3.2020    0.0060   +290bps     +0bps
            FORWARD   RATE      AGREEMEN                    
                      3x6       6x9       9x12      3M
 Czech Rep                1.40      1.60      1.74      1.17
 Hungary                  0.67      0.90      1.16      0.30
 Poland                   1.75      1.80      1.85      1.70
 Note: FRA  are for ask prices                              
 (Editing by Louise Ireland)
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