August 22, 2018 / 9:21 AM / 8 months ago

CEE MARKETS-Richter drags down Budapest stock index, forint retreats

    * Forint, zloty give up ground as dollar rebounds
    * Richter shares plunge as U.S. regulators block Esmya drug
    * Fully sold bond auction is seen in Prague

    By Sandor Peto and Robert Muller
    BUDAPEST/PRAGUE, Aug 22 (Reuters) - A plunge in the shares
of pharmaceuticals group Richter dragged down
Budapest's main equities index in an otherwise quiet day in
Central Europe on Wednesday.
    Global trends - including worries over the United States'
tensions with China and Turkey - have mostly suppressed domestic
news in the region for months. 
    The dollar regained some composure against a basket
of currencies on Wednesday after a fall on Tuesday, but its gain
was moderate.
    Reflecting that, the forint and the zloty
 gave up some of the ground gained in the previous
session, and shed 0.1 percent against the euro by 0840 GMT.
    The forint did not benefit from figures showing a continuing
surge in Hungary's gross wages which grew by 11.2 percent in
annual terms in June.
    Wages have been surging across the region as employers fight
an outflow of workers into better-paid Western European labour
    While in the Czech Republic and Romania that trend has
caused inflation worries, that is not the case in Hungary and
    The Hungarian central bank reaffirmed its loose monetary
policy at its meeting on Tuesday.
    Polish retail sales surged by 9.3 percent in annual terms in
July, but the figures released on Wednesday are unlikely to
change the Polish central bank's dovish stance, analysts said.
    With trade staying in slow summertime mode, regional
equities indices changed little, mostly easing slightly, while
Asian and Western European indices were also mixed.
    But Budapest's main index fell more than one percent,
driven by Richter, whose stocks shed as much as 7 percent, after
U.S. regulators declined to approve its Esmya drug, requesting
more information and citing safety issues outside the United
    While Polish government bonds changed little, Czech yields
edged up by 1-3 basis points ahead of an auction, with the
10-year paper bid at 2.2 percent.
    The yield has risen by about 130 basis points since the
Czech central bank started to increase its interest rates in
August last year to fight a pick-up in inflation.
    "ASW (asset swap) spreads have been strengthening lately,
but with the issuance needs largely covered for this year,
nominal yields rise this year, and year end effects approaching
we expect further room to go tighter at the long end," Komercni
Banka trader Dalimil Vyskovsky said in a morning note.
    The government is expected to sell the full amount of
2029-expiry bonds at the auction even though the offer has been
increased to 7 billion crowns from 4 billion, the trader said.  
    Romanian markets shrugged off comments from Liviu Dragnea,
the head of the ruling Social Democrat party, who said
anti-government demonstrations on Aug. 10, in which hundreds of
people were injured, were part of an attempted coup.
            CEE       SNAPSHOT   AT                         
            MARKETS             1040 CET            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2018
 Czech      <EURCZK=   25.7450   25.7540    +0.03%    -0.79%
 crown      >                                       
 Hungary    <EURHUF=  323.4300  323.0000    -0.13%    -3.87%
 forint     >                                       
 Polish     <EURPLN=    4.2955    4.2898    -0.13%    -2.77%
 zloty      >                                       
 Romanian   <EURRON=    4.6422    4.6409    -0.03%    +0.81%
 leu        >                                       
 Croatian   <EURHRK=    7.4230    7.4205    -0.03%    +0.10%
 kuna       >                                       
 Serbian    <EURRSD=  118.0500  118.0100    -0.03%    +0.38%
 dinar      >                                       
 Note:      calculated from               1800 CET          
                      Latest    Previous  Daily     Change
                                close     change    in 2018
 Prague                1073.58  1068.860    +0.44%    -0.42%
 Budapest             36519.47  37007.66    -1.32%    -7.26%
 Warsaw                2276.54   2281.02    -0.20%    -7.50%
 Bucharest             8196.27   8211.84    -0.19%    +5.71%
 Ljubljana  <.SBITOP    873.01    873.97    -0.11%    +8.26%
 Zagreb                1831.03   1831.05    -0.00%    -0.64%
 Belgrade   <.BELEX1    730.27    731.47    -0.16%    -3.89%
 Sofia                  634.09    634.05    +0.01%    -6.40%
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
 Czech                                              spread
   2-year   <CZ2YT=R    1.2930    0.0260   +191bps     +3bps
   5-year   <CZ5YT=R    1.7130    0.0220   +201bps     +2bps
   10-year  <CZ10YT=    2.2000    0.0120   +187bps     +1bps
   2-year   <PL2YT=R    1.6170   -0.0060   +223bps     +0bps
   5-year   <PL5YT=R    2.5140    0.0220   +281bps     +2bps
   10-year  <PL10YT=    3.1510   -0.0020   +283bps     +0bps
            FORWARD   RATE      AGREEMEN                    
                      3x6       6x9       9x12      3M
 Czech Rep                1.79      1.93      2.03      1.48
 Hungary                  0.49      0.67      0.87      0.19
 Poland                   1.75      1.78      1.81      1.71
 Note: FRA  are for ask prices                              

 (Reporting by Sandor Peto
Editing by Andrew Heavens)
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