December 20, 2017 / 2:39 PM / a month ago

CEE MARKETS-Zloty shrugs off EU action against Poland

    * Brussels moves to suspend Poland's EU voting rights
    * Zloty reverses early firming, but impact moderate
    * Prague stocks lead regional rise, set 6-year high
    * Romanian MPs seen passing rest of court reforms, leu eases

 (Recasts with Commission proposal to suspend Poland's voting
rights)
    By Sandor Peto and Marcin Goettig
    BUDAPEST/WARSAW, Dec 20 (Reuters) - The zloty was steady on
Wednesday, shrugging off an unprecedented move by the European
Commission to suspend Poland's European Union voting rights.
    That process, aimed at penalising Warsaw for judicial
reforms the EU executive says threaten the rule of law, can take
effect only if all other EU states approve it.
    The zloty dipped to 4.2095 versus the euro but
rebounded to 4.1995 by 1350 GMT after Hungary said it would veto
the Commission's action.
    The currency's swings were small as neither the EU decision
nor Hungary's intention to derail was a surprise.
    Robust economic growth and expectations for monetary
tightening are expected to strengthen some of the region's
currencies including the zloty next year.
    The leu, which shed 0.2 percent against the euro to
4.629, is an exception.
    Concerns that Romania's economy may overheat and that a
judicial overhaul there could block a fight against corruption
have kept a lid on the currency. Lawmakers passed part of the
reform on Tuesday and are expected to approve the rest late on
Wednesday.
    Regional stock markets also brushed off political
developments.
    Bucharest's main index firmed 0.6 percent to a
two-week high and Warsaw tested three-week highs.
    The Czech index set a six-year high, supported by
further progress towards a U.S. tax overhaul.
    Expectations for tax stimulus in the world's biggest economy
have buoyed stock prices in the European Union's fast-growing
emerging markets in the past weeks.
    The region's bourses did not track a pullback from record
highs in Wall Street, which also made German stocks
retreat.
    "But you can feel the uncertainty," said Jozsef Miro,
strategist of Erste in Budapest.
    "In the past, (European and U.S.) stock markets had their
own ways. Germany starting to correlate with Wall Street may not
be a good sign."
    The Czech crown firmed 0.2 percent to 25.65 against
the euro.
    The Czech central bank is seen keeping its interest rates on
hold on Thursday, but it could maintain hawkish rhetoric after
two hikes since August, and raise rates again in the first
quarter of 2018, according to a Reuters poll of analysts.
 
               CEE MARKETS  SNAPSH   AT  1450 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2017
 Czech crown                25.650  25.693   +0.17   5.29%
                                 0       0       %  
 Hungary                    313.08  312.88  -0.06%  -1.36%
 forint                         00      50          
 Polish zloty               4.1995  4.1999   +0.01   4.87%
                                                 %  
 Romanian leu               4.6290  4.6197  -0.20%  -2.03%
 Croatian                   7.5435  7.5443   +0.01   0.15%
 kuna                                            %  
 Serbian                    119.20  119.00  -0.17%   3.48%
 dinar                          00      00          
 Note: daily   calculated   previo  close   1800          
 change        from         us      at      CET     
                            STOCKS                        
                            Latest  Previo  Daily   Change
                                    us              
                                    close   change  in
                                                    2017
 Prague                     1075.8  1071.2   +0.43   +16.7
                                 6       4       %      4%
 Budapest                   38915.  38807.   +0.28   +21.6
                                88      09       %      0%
 Warsaw                     2460.9  2455.9   +0.20   +26.3
                                 2       9       %      4%
 Bucharest                  7812.9  7769.4   +0.56   +10.2
                                 4       4       %      7%
 Ljubljana                  790.87  786.71   +0.53   +10.2
                                                 %      1%
 Zagreb                     1843.7  1845.0  -0.07%  -7.57%
                                 7       8          
 Belgrade                   752.10  750.27   +0.24   +4.84
                                                 %       %
 Sofia                      662.10  662.80  -0.11%   +12.9
                                                        0%
                            BONDS                         
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                    0.666   0.325   +134b   +31bp
                                                ps       s
   5-year                    0.753   0.025   +100b   -1bps
                                                ps  
   10-year                   1.488   0.032   +108b   +0bps
                                                ps  
 Poland                                                   
   2-year                    1.749  -0.011   +242b   -3bps
                                                ps  
   5-year                    2.676       0   +292b   -3bps
                                                ps  
   10-year                   3.365   0.034   +296b   +0bps
                                                ps  
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
                                                    interb
                                                    ank
 Czech Rep             <PR    1.04    1.24    1.38       0
               IBOR=>                               
 Hungary               <BU    0.03    0.13    0.19    0.03
               BOR=>                                
 Poland                <WI   1.761   1.804   1.908    1.72
               BOR=>                                
 Note: FRA     are for ask                                
 quotes        prices                               
 *********************************************************
 *****
 
 (Additional reporting by Radu Marinas in Bucharest and Jason
Hovet in Prague)
  
 
 

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