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CEE MARKETS-Crown firms after data, Serbia holds rates, buying dinar
December 7, 2017 / 3:00 PM / 4 days ago

CEE MARKETS-Crown firms after data, Serbia holds rates, buying dinar

    * Czech Oct industrial output surges by more than 10 pct
    * Crown is off 3-week low, timing and scope of rate hikes
    * Serbian central bank keeps rates on hold, buys dinar in
    * Prague, Budapest, Bucharest debt auctions draw sound

 (Adds Serbian central bank decision, market intervention,
government debt auctions)
    By Sandor Peto and Robert Muller
    BUDAPEST/PRAGUE, Dec 7 (Reuters) - The crown
rebounded from 3-week lows and demand for Czech Treasury bills
surged at an auction on Thursday as new Czech data underpinned
healthy and balanced economic expansion.
    Czechs were a leader of Central Europe's robust growth in
the third quarter, with 5 percent annual output rise.
    Thursday's October data showed 10.5 percent annual surge in
Czech industrial output, and the trade account remained in a
    The crown, with 5.5 percent gain versus the euro so far this
year, became the world's top-performing currency in 2017,
boosted by the strong economy and two central bank (CNB) rate
hikes since August.
    It firmed to 25.59 by 1416 GMT, after reaching a 3-week low
of 25.696 on Wednesday amid doubts if the CNB continues to raise
rates at its meeting next week.
    Investments could rise further next year, said Viktor
Zeisel, analyst at Komercni Banka.
    "We expect a (CNB) rate hike in each quarter of the next
year," he added.
    A worsening labour shortage forces firms to invest in
efficiency and automation, Erste analyst Jiri Polansky said.
    The output data, though it heralds higher wage growth, will
not increase pressure on the CNB to hike rates because a rise in
productivity-enhancing investment moderates inflation, he added.
    Analysts expect the crown to lead the forint and
the zloty higher next year.
    Hoping for further gains, foreigners keep the huge amount of
crown positions built before the CNB removed a cap at 27 against
the euro in April.
    Demand surged at an auction of 19-week Czech Treasury bills,
pushing the yield deeper into the negative, to -0.8 percent.
    In Budapest, the past months' slide in government bond
yields to record lows did not curb appetite either. 
    Thursday's Hungarian bond auctions drew solid demand, just
like Bucharest's 3-year bond tender.
    Romanian bond prices got cheap in the past months, sliding
due to worries that robust growth, which reached 8.8 percent in
annual terms in the third quarter, could boost inflation.
    A key growth driver in the region is a surge in wages.
Workers had quit by the millions, moving West.
    Croatia on Thursday raised its minimum wage and its quota
for foreign workers.
    Inflation is less of a worry in Serbia, but its central bank
kept its 3.5 percent main rate, the highest in the region, on
hold on Thursday, fearing that a likely Federal Reserve rate
hike could weigh on the dinar and domestic bonds.
    Meanwhile, it continued to sell euros in the market to stem
a weakening of the dinar.
               CEE MARKETS  SNAPSH   AT  1516 CET         
                            Latest  Previo  Daily   Change
                            bid     close   change  in
 Czech crown                25.590  25.619   +0.12   5.54%
                                 0       5       %  
 Hungary                    314.88  314.46  -0.13%  -1.92%
 forint                         00      50          
 Polish zloty               4.2140  4.2140   +0.00   4.51%
 Romanian leu               4.6340  4.6291  -0.11%  -2.14%
 Croatian                   7.5440  7.5472   +0.04   0.15%
 kuna                                            %  
 Serbian                    119.65  119.49  -0.13%   3.09%
 dinar                          00      00          
 Note: daily   calculated   previo  close   1800          
 change        from         us      at      CET     
                            Latest  Previo  Daily   Change
                                    close   change  in
 Prague                     1055.9  1053.1   +0.27   +14.5
                                 9       5       %      8%
 Budapest                   38181.  37591.   +1.57   +19.3
                                17      53       %      0%
 Warsaw                     2386.0  2394.6  -0.36%   +22.4
                                 6       7              9%
 Bucharest                  7656.5  7670.1  -0.18%   +8.07
                                 4       6               %
 Ljubljana                  779.11  773.03   +0.79   +8.57
                                                 %       %
 Zagreb                     1856.1  1853.2   +0.16  -6.95%
                                 2       3       %  
 Belgrade                   742.65  743.97  -0.18%   +3.52
 Sofia                      665.36  666.31  -0.14%   +13.4
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
   2-year                    0.075   0.072   +083b   +8bps
   5-year                    0.807   0.021   +119b   +2bps
   10-year                    1.42  -0.001   +112b   +0bps
   2-year                    1.656  -0.005   +241b   +0bps
   5-year                    2.651   0.015   +303b   +2bps
   10-year                   3.244  -0.002   +294b   +0bps
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
 Czech Rep             <PR    0.99    1.19     1.3       0
 Hungary               <BU    0.03    0.06     0.1    0.03
 Poland                <WI    1.77    1.82    1.92    1.73
 Note: FRA     are for ask                                
 quotes        prices                               

 (Additional reporting by Radu Marinas in Bucharest)

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