November 17, 2017 / 10:23 AM / a year ago

CEE MARKETS-Zloty rebounds, strong wage data can polarize rate setters

    * Zloty firms, 7.4 pct Oct jump in wages is bigger than
    * Wage growth pick-up could make cbank hawks louder
    * CEE FX volatility subdued; Fed, ECB clues awaited
    * Prague's local markets are closed due to national holiday

 (Adds Polish wage figure)
    By Sandor Peto and Bartosz Chmielewski
    BUDAPEST/BUDAPEST, Nov 17 (Reuters) - The zloty firmed on
Friday as Poland released data showing a bigger than expected
pick-up in wage growth, which could make hawks in the Polish
central bank louder.
    The zloty reversed an earlier easing and was up
0.1 percent against the euro by 1345 GMT while most other
Central European currencies were weaker from Thursday's close.
    Polish corporate wages rose 7.4 percent in annual terms in
October, more than analysts' 6.45 percent forecast. That was a
pick-up from September's already strong 6 percent figure. 
    Accelerating wage increases help drive economic growth and
inflation in Central Europe. Inflation is getting additional
fuel from a labour shortage in the region, with many of its
workers moving to richer Western countries. 
    Views within the Monetary Policy Council of the National
Bank of Poland (NBP) have been split over inflation risks. That
was demonstrated on Thursday by conflicting comments from two
    Jerzy Kropiwnicki played down risks and said rates should
remain unchanged for at least the next 12 months.
    Eugeniusz Gatnar said inflation could pick up faster than
expected and the bank may need a rate hike as early as in the
first quarter of next year.
    "If growth of corporate sector wages visibly accelerates,
one cannot exclude further polarisation of NBP representatives'
views," Pekao SA analysts in a note before the release of the
October figures.
    The zloty's reaction remained moderate.
    Volatility in regional currency markets has mostly died down
in recent weeks as investors wait for domestic data and clues
about Federal Reserve and European Central Bank monetary policy.
    The crown has been slowly gaining against the euro
amid expectations for further rate increases by the Czech
central bank. The forint has been easing gradually as the
Hungarian central bank loosens policy further.
    On Friday the currency firmed 0.2 percent to 311.55 versus
the euro in a rebound from six-and-1/2-month lows hit on
    The central bank is expected to keep its base rate on hold
for years, but it may launch new unconventional tools at its
Nov. 21 meeting to push long-term market interest rates lower. 
    Expectations for a rise in rates have helped buoy listed
bank shares in the region. The profits of Warsaw's top 10 
listed banks rose 23 percent in annual terms in the third
quarter, the Polish newspaper Rzeczpospolita said.
    The index of Polish listed banks rose by 0.65
percent on Friday, approaching a 2 1/2-year high. 
    The kuna eased a shade, but was off Thursday's
nine-month lows against the euro. Croatia launched a 2030-expiry
euro bond on Thursday.
               CEE MARKETS  SNAPSH   AT  1445 CET         
                            Latest  Previo  Daily   Change
                            bid     close   change  in
 Czech crown                25.585  25.564  -0.08%   5.56%
                                 0       5          
 Hungary                    311.55  312.03   +0.15  -0.88%
 forint                         00      00       %  
 Polish zloty               4.2356  4.2377   +0.05   3.97%
 Romanian leu               4.6432  4.6394  -0.08%  -2.33%
 Croatian                   7.5680  7.5645  -0.05%  -0.17%
 Serbian                    118.45  118.42  -0.03%   4.14%
 dinar                          00      00          
 Note: daily   calculated   previo  close   1800          
 change        from         us      at      CET     
                            Latest  Previo  Daily   Change
                                    close   change  in
 Budapest                   39220.  38982.   +0.61   +22.5
                                06      30       %      5%
 Warsaw                     2435.7  2411.1   +1.02   +25.0
                                 7       1       %      4%
 Bucharest                  7753.3  7716.2   +0.48   +9.43
                                 0       6       %       %
 Ljubljana                  792.06  790.95   +0.14   +10.3
                                                 %      8%
 Zagreb                     1854.2  1852.7   +0.08  -7.05%
                                 6       4       %  
 Belgrade                   735.73  733.26   +0.34   +2.56
                                                 %       %
 Sofia                      668.98  668.91   +0.01   +14.0
                                                 %      8%
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
   2-year                    1.598  -0.003   +230b   -2bps
   5-year                    2.624   0.023   +297b   +2bps
   10-year                   3.412    0.02   +304b   +2bps
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
 Czech Rep             <PR    0.99    1.14    1.26       0
 Hungary               <BU    0.03    0.06     0.1    0.03
 Poland                <WI   1.771   1.825   1.925    1.73
 Note: FRA     are for ask                                
 quotes        prices                               

 (Reporting by Sandor Peto; Editing by Larry King and Peter
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