May 7, 2014 / 1:25 PM / 4 years ago

CEE MARKETS 2--Polish, Czech rates on hold; MOL gains on Eni deal

* Polish, Czech central banks keep rates on hold, as
    * MOL to buy Eni's CEE filling stations; shares gain
    * Richter rises as first-quarter results beat forecasts

    By Krisztina Than
    BUDAPEST, May 7 (Reuters) - Hungarian oil group MOL
 rose as much as one percent on Wednesday after it
announced that it would buy Eni's Czech, Slovak and Romanian
filling stations, outperforming other stocks in the region
during most of the day.
    It gave back most of those gains by the afternoon, trading
0.3 percent higher at 1258 GMT.
    Hungarian bonds also firmed on Wednesday, helped by a strong
switch auction. Currency markets in Poland and the
Czech Republic were largely unfazed by their central banks'
decision to keep interest rates unchanged.
    Interest rates across central Europe are already at record
lows after central banks loosened policy to boost economic
growth. The rate decisions in Poland and the Czech Republic were
in line with market expectations.
    The Czech bank already has its main rate at a technical
zero. Poland, the region's largest economy, has kept borrowing
costs at a record low of 2.5 percent.
    "While growth (in Poland) has entered a soft patch, it will
likely accelerate in H2 2014," Barclays said in a note before
the Polish rate decision.
    "On current trends, the NBP need not be in any hurry to
begin the hike cycle, such that the risk is that the NBP could
delay the start of the hiking cycle beyond our current forecast
of Q1 15."
    Polish Economy Minister Janusz Piechocinski said earlier on
Wednesday that trade disruptions caused by the Ukraine-Russia
conflict could shave more than 0.2 percentage point off the
country's growth this year. 
    On Tuesday, Romania's central bank also kept its main
interest rate at a record low of 3.5 percent. 
    At 1200 GMT the Polish zloty was down 0.1 percent,
while the Czech crown was flat. The forint,
which has been the region's most volatile currency, gained a
quarter of a percent versus the euro in thin trade.
    "Right now, there is no reason for the forint to weaken, as
(government bond) yields are coming down and the market largely
ignores the Ukraine crisis," a dealer in Budapest said.
    Hungarian government bond yields fell 3-7 basis points
compared to Tuesday's fixing..
    The only country in the region which is still reducing rates
is Hungary, where the central bank has pursued an aggressive
easing cycle, cutting rates in an unbroken series of monthly
reductions since August 2012. Hungary's base rate is at 2.5
percent now, and the bank had left the door open to possible
further easing.
    In neighbouring Croatia, after Tuesday's sacking of Finance
Minister Slavko Linic, the yield on 10-year sovereign bond
inched up 3 basis points but the market's reaction was limited.
The index of Zagreb stock exchange was 1.2 percent down
at 1256 GMT.
    Stock markets in central Europe were mixed, with Budapest up
0.25 percent at 1220 GMT, Prague 0.1 percent higher and
the Polish stock market down 0.2 percent.
    However, Hungarian oil group MOL gained 1.1 percent on an
announcement that it had agreed to buy Eni's filling
stations in the Czech Republic, Slovakia and Romania, boosting
its position in the retail fuel market. Later it gave back part
of those gains amid thin volumes.
    Another Hungarian blue chip, drugmaker Richter,
also gained after its earnings, hit by falling sales in
crisis-hit Ukraine and Russia, still beat most analysts'
    Richter rose 1.2 percent in early trade but gave back most
of those gains and traded 0.4 percent higher at 1247 GMT.
    The company reported a 51 percent fall in first-quarter net
profit to 9.34 billion forints ($42.42 million), above analyst
forecasts for 7.9 billion forints. 
 ************************** CURRENCIES ************************
                             Latest  Previous   Daily   Change
                             bid     close      change  in 2014
 Czech crown                 27.408    27.415  +0.03%  -0.28%
 Hungarian forint           305.720   306.470  +0.25%  -2.86%
 Polish zloty                 4.201     4.195  -0.15%  -1.22%
 Romanian leu                 4.430     4.431  +0.04%  +0.69%
 Croatian kuna                7.588     7.584  -0.05%  +0.40%
 Serbian dinar              115.590   115.400  -0.16%  -0.94%
 Note: daily change calculated from previous close at 1600 GMT
 **************************** STOCKS **************************
                             Latest  Previous   Daily   Change
                                     close      change  in 2014
 Prague                      1010.66    1010.58  +0.01% +2.41%
 Budapest                  17696.02  17660.38   +0.20%   -3.48%
 Warsaw                     2382.41   2389.30    -0.29%  -0.91%
 Bucharest                  6440.15   6423.66  +0.26%   -0.58%
 ***************************** BONDS **************************
                         Yield    Yield    Spread    Daily
                         (bid)    change   vs Bund   change in
 Czech Republic                                      spread
   2-year                0.239    -0.075   +9bps     -7bps
   5-year                0.832     -0.020   +29bps      -2bps
  10-year                1.805    -0.034   +34bps     -3bps
   3-year                4.010     -0.040   +379bps    -3bps
   5-year                4.300     -0.070   +375bps    -7bps
  10-year                5.300    -0.030    +384bps    -3bps
   2-year                2.930    -0.010    +278bps    -1bps
   5-year                3.400    -0.010    +285bps    -1bps
  10-year                4.000   -0.010    +254bps    -1bps
 ******************* FORWARD RATE AGREEMENTS ******************
                              3x6     6x9    9x12  3M interbank
 Czech Rep                    0.400   0.470  0.500   0.37
 Hungary                      2.665   2.770  2.950   2.55
 Poland                       2.760   2.750  2.810   2.72
 Note: FRA quotes are for ask prices
 (Reporting by Krisztina Than; Editing by)

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