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CEE MARKETS-Warsaw stocks surge, regional bond auctions well-bid
February 16, 2017 / 2:54 PM / 7 months ago

CEE MARKETS-Warsaw stocks surge, regional bond auctions well-bid

* Polish minister floats idea of merging refiners
    * Warsaw's equities index reaches 18-month high
    * Demand is healthy at region's debt auctions at higher
yields
    * Hungary sells more 10-year bonds than planned on robust
demand

 (Recasts with jump of Polish stocks, debt auctions in region)
    By Sandor Peto and Jason Hovet
    BUDAPEST/PRAGUE, Feb 16 (Reuters) - Polish stocks climbed to
an 18-month high on Thursday as the government floated the idea
of merging two refiners and the gas company PGNiG 
unexpectedly forecast strong profits for the fourth quarter.
     Polish Treasury Minister Henryk Kowalczyk was quoted as
saying late on Wednesday that merging PKN Orlen and
Lotos, both part-owned by the state, could help the
government increase its influence. 
     The Warsaw stock market's blue-chip index rose 1.3
percent by 1333 GMT as PKN shares surged 4.5 percent and Lotos
gained 7.2 percent. State-run PGNiG gained 7.8 percent after it
said that it would post a big profit in the fourth quarter
.  
     Central European stocks have gained during a global rally
in recent weeks. In Poland, encouraging economic data has also
helped. Thursday's January employment and business wages figures
also showed better-than-expected growth. 
    Budapest's stock index retreated from record highs
and Prague from 14-month highs.
    Bucharest touched a 19-month high and got near a
nine-year high. Transgaz stocks surged 5.5 percent
after the Romanian gas pipeline operator reported a jump in
profits.  
    Government debt auctions in the region drew
higher-than-expected demand. Bonds had weakened earlier on
expectations the Federal Reserve would raise U.S. interest rates
in March.
    Hungarian bonds regained almost all the ground lost in early
trade after the government sold more debt than planned at its
auctions, which saw robust demand, mainly for 10-year bonds.
    The 10-year bond was sold at an average yield of 3.57
percent, up from 3.43 percent at an auction four weeks ago but
down from early secondary market levels at 3.62 percent.
    Poland and Romania also sold all the bonds they had planned.
    Poland's 10-year bond yield dropped 4 basis points to 3.84
percent by 1355 GMT. The government said it had already financed
43 percent of its borrowing need for 2017.   
    The Czech Republic sold three-month Treasury bills at an
average yield of -0.8 percent, 40 basis points higher than two
weeks ago.
    The yield on two-year Czech bonds jumped 19 basis points on
Thursday to -0.361 percent, a five-month high and 90 basis
points above levels five weeks ago. 
    Early this year, investors bought Czech assets on
expectations the central bank would remove its cap on the value
of the crown.
    Since then, Czech central bankers have curbed speculation
the currency would surge, saying it had been significantly
overbought.
    
              CEE        SNAPS   AT  1433          
              MARKETS    HOT    CET           
                         CURRENCIES                
                         Lates  Previ  Daily  Chang
                         t      ous           e
                         bid    close  chang  in
                                       e      2017
 Czech crown             27.02  27.02   +0.0  -0.06
                            20     90     3%      %
 Hungary                 308.2  308.2  -0.01  0.18%
 forint                    700    350      %  
 Polish                  4.321  4.311  -0.21  1.92%
 zloty                       0      9      %  
 Romanian                4.522  4.519  -0.07  0.28%
 leu                         5      5      %  
 Croatian                7.447  7.455   +0.1  1.44%
 kuna                        5      5     1%  
 Serbian                 123.9  123.9  -0.04  -0.48
 dinar                     500    000      %      %
 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                  968.8  972.8  -0.41   +5.1
                             9      3      %     3%
 Budapest                33743  33981  -0.70   +5.4
                           .71    .50      %     4%
 Warsaw                  2213.  2184.   +1.3   +13.
                            56     33     4%    64%
 Bucharest               7684.  7676.   +0.1   +8.4
                            14     01     1%     6%
 Ljubljana               762.8  762.4   +0.0   +6.3
                             7      4     6%     1%
 Zagreb                  2174.  2166.   +0.3   +9.0
                            47     44     7%     0%
 Belgrade     <.BELEX15  708.8  703.5   +0.7  -1.19
              >              2      2     5%      %
 Sofia                   594.2  593.5   +0.1   +1.3
                             6      6     2%     4%
                         BONDS                     
                         Yield  Yield  Sprea  Daily
                                       d      
                         (bid)  chang  vs     chang
                                e      Bund   e in
 Czech                                        sprea
 Republic                                     d
   2-year     <CZ2YT=RR  -0.36  0.191   +042   +18b
              >              1           bps     ps
   5-year     <CZ5YT=RR  0.255  0.014   +067   +1bp
              >                          bps      s
   10-year    <CZ10YT=R  0.689  0.021   +031   +3bp
              R>                         bps      s
 Poland                                            
   2-year     <PL2YT=RR  2.227  -0.02   +300  -3bps
              >                     1    bps  
   5-year     <PL5YT=RR  3.173  -0.04   +358  -4bps
              >                          bps  
   10-year    <PL10YT=R  3.856  -0.03   +348  -3bps
              R>                    4    bps  
              FORWARD    RATE   AGREEMENT          
                         3x6    6x9    9x12   3M
                                              inter
                                              bank
 Czech Rep            <   0.27   0.31   0.36      0
              PRIBOR=>                        
 Hungary              <    0.4   0.55   0.68   0.24
              BUBOR=>                         
 Poland               <  1.777  1.807  1.902   1.73
              WIBOR=>        5      5      5  
 Note: FRA    are for                              
 quotes       ask                             
              prices                          
 **************************************************
 ************
 
 (Additional reporting by Luiza Ilie in Bucharest; Editing by
Larry King)

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