January 3, 2020 / 10:44 AM / 25 days ago

CEE MARKETS-FX, stocks fall as threat of Middle East conflict grows

    By Radu-Sorin Marinas
    BUCHAREST, Jan 3 (Reuters) - Central European currencies
fell on Friday and stocks gave up some of the previous day's
gains, after a U.S. air strike killed a top Iranian military
official.
    The region started the new year strong on Thursday, with
Budapest's stock index reaching a record high and the Czech
crown climbing to its highest against the euro since April 2018.
But currencies and shares fell back as world stocks slipped and
oil prices soared.
    Markets grew nervous after the Pentagon confirmed the air
strike, saying Iran's Major-General Qassem Soleimani was
developing plans to attack Americans in the Middle East.

    "Friday morning trade on the FX market is bringing an
increase in risk-off sentiment due to geopolitical risk
increasing again," said Konrad Ryczko, an analyst at DM BOS.
    By 1000 GMT, the Polish zloty was leading regional
losses, down 0.3% to 4.255 against the euro, followed by the
Hungarian forint with a 0.2% decline to 329.5.
    "The forint firmed past a key level yesterday. The currency
firmed past 330 versus the euro ... the next important level is
at 327.50 which could be reached next week based on the current
picture," brokerage Equilor said.
    The Romanian leu and the Czech crown
nudged higher. 
    
    
    The crown has started the year at its strongest level
against the euro since April 2018, touching 25.310 on Friday.
    Minutes from the Czech central bank's last policy meeting on
Dec. 18, released on Friday, showed rates were likely to remain
stable, some analysts believe.
    "We rate the overall message of the minutes as less hawkish
than Governor Jiri Rusnok's press conference after the bank
meeting," Komercni Banka analysts said.
    Regional stocks, which started 2020 on a positive note, with
the Budapest stock exchange reaching a record high the previous
day, weakened in early trade.
    Warsaw's WIG20 fell 1.25% on the day and 
Budapest's main index eased 0.5%
           CEE        SNAPSHOT   AT                      
           MARKETS              1112              
                                CET               
                      CURRENCI                           
                      ES                          
                      Latest    Previou  Daily    Change
                                s                 
                      bid       close    change   in 2020
 Czech                 25.3120  25.3370   +0.10%   +0.47%
 crown                                            
 Hungary              329.5000  329.000   -0.15%   +0.50%
 forint                               0           
 Polish                 4.2549   4.2440   -0.26%   +0.04%
 zloty                                            
 Romanian               4.7810   4.7816   +0.01%   +0.15%
 leu                                              
 Croatian               7.4450   7.4430   -0.03%   +0.01%
 kuna                                             
 Serbian              117.6000  117.570   -0.03%   -0.03%
 dinar                                0           
 Note:     calculated from               1800            
 daily                                   CET      
 change                                           
                                                         
                      Latest    Previou  Daily    Change
                                s                 
                                close    change   in 2020
 Prague                1123.62  1123.91   -0.03%   +0.72%
                                     00           
 Budapest             46024.67  46230.2   -0.44%   -0.13%
                                      2           
 Warsaw                2173.59  2200.10   -1.20%   +1.09%
 Buchares              9946.63  9977.30   -0.31%   -0.31%
 t                                                
 Ljubljan               925.90   925.86   +0.00%   +0.00%
 a                                                
 Zagreb                2033.01  2029.25   +0.19%   +0.77%
 Belgrade  <.BELEX15    801.69   801.69   +0.00%   +0.00%
           >                                      
 Sofia                  566.69   568.25   -0.27%   -0.26%
                      BONDS                              
                      Yield     Yield    Spread   Daily
                      (bid)     change   vs Bund  change
                                                  in
 Czech                                            spread
 Republic                                         
   2-year  <CZ2YT=RR    1.7540   0.0080   +239bp    +3bps
           >                                   s  
   5-year  <CZ5YT=RR    1.4850  -0.0580   +204bp    -1bps
           >                                   s  
           <CZ10YT=R    1.6560  -0.0040   +194bp    +5bps
 10-year   R>                                  s  
 Poland                                                  
   2-year  <PL2YT=RR    1.4790  -0.0160   +211bp    +1bps
           >                                   s  
   5-year  <PL5YT=RR    1.7900  -0.0250   +235bp    +3bps
           >                                   s  
           <PL10YT=R    2.0680  -0.0580   +235bp    +0bps
 10-year   R>                                  s  
           FORWARD    RATE      AGREEME                  
                                NT                
                      3x6       6x9      9x12     3M
                                                  interba
                                                  nk
 Czech             <      2.27     2.27     2.23     2.18
 Rep       PRIBOR=>                               
 Hungary           <      0.24     0.30     0.41     0.16
           BUBOR=>                                
 Poland            <      1.72     1.69     1.68     1.71
           WIBOR=>                                
 Note:     are for ask prices                            
 FRA                                              
 quotes                                           
 ***********************************************         
 ***************                                  
 
    
 (Reporting by Krisztina Than in Budapest, Jason Hovet in Prague
and Alan Charlish in Warsaw; editing by Larry King)
  
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