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CEE MARKETS-Weak dollar fuels gains in currencies, stocks

Kitco News

* Polish zloty leads gains with 0.4 pct rise vs euro

* Helped by comments from EU Commission head - analyst

* Stock markets in region rise, Hungary sells bonds


By Marcin Goettig

WARSAW, Feb 15 (Reuters) - Weakness in the dollar fuelled gains in central European currencies on Thursday, with the zloty getting a further lift from signs that tensions between Poland and the European Commission might ease.

Stocks across the region also gained following increases in Asia and on Wall Street, where markets brushed aside strong U.S. inflation data and recovered further from steep looses suffered earlier this month. The zloty gained 0.4 percent to 4.1528 versus the euro, its strongest level in a week.

Bank Pekao said in a note that it was getting support from the decline in the dollar - often heralding higher global risk appetite - against the euro.

The Polish currency - one of world's best performinglast year - was also helped by comments from the head of the European Commission, who said on Wednesday said he saw a "good chance" of a rapprochement between Poland and the EU. "This sounds encouraging, but we are sceptical that the PiS government will make any necessary adjustments for such a deal to be completed," Commerzbank said in a note. "Nevertheless (...) we shall follow further developments with cautious optimism."

The right-wing Law and Justice (PiS) party government has clashed with the EU executive on a number of issues including migrants and a judicial reform. Poland changed its prime minister in December.

Data showing Polish inflation slowed to 1.9 percent in January did not impact the currency, cementing expectations that interest rates will remain unchanged until at least the start of 2019. The Hungarian forint gained 0.2 percent, regaining some ground after falling on Wednesday, while the Czech crown rose 0.1 percent.

"The forint was bolstered by favourable international sentiment," analysts at Erste Investment said, adding the gains did not mean that a recent weakening trend versus the euro would be broken.

Hungary sold 80 billion forints ($320 million) worth of government bonds at an auction on Thursday, 15 billion forints more than planned. In the Czech Republic, trade unions at Volkswagen's Skoda Auto - one of the country's biggest exporters - rejected a wage offer from the carmaker and started preparations for a possible strike. CEE SNAPSHOT AT 1100 CET

MARKETS

CURRENCIES

Latest Previous Daily Change

bid close change in

2018 Czech crown 25.3580 25.3835 +0.10% 0.67% Hungary forint 311.6000 312.1900 +0.19% -0.34% Polish zloty 4.1528 4.1685 +0.38% 0.55% Romanian leu 4.6600 4.6617 +0.04% 0.37% Croatian kuna 7.4385 7.4355 -0.04% -0.14% Serbian dinar 118.0700 118.1700 +0.08% 0.28% Note: daily calculate previous close at 1800 change d from CET

STOCKS

Latest Previous Daily Change

close change in

2018 Prague 1114.55 1109.63 +0.44% +3.38

% Budapest 38960.86 38454.35 +1.32% -1.06% Warsaw 2464.07 2449.79 +0.58% +0.12

% Bucharest 8208.16 8167.16 +0.50% +5.86

% Ljubljana 812.79 813.53 -0.09% +0.79

% Zagreb 1854.32 1851.09 +0.17% +0.62

% Sofia 692.85 697.24 -0.63% +2.27

%

BONDS

Yield Yield Spread Daily

(bid) change vs Bund change

in Czech Republic spread 2-year <CZ2YT=RR 0.583 -0.004 +107bp -1bps

> s 5-year <CZ5YT=RR 1.085 0.009 +096bp -2bps

> s 10-year <CZ10YT=R 1.841 0.008 +106bp -2bps

R> s Poland 2-year <PL2YT=RR 1.758 0.005 +225bp +0bps

> s 5-year <PL5YT=RR 2.767 0.044 +264bp +2bps

> s 10-year <PL10YT=R 3.557 0.061 +278bp +3bps

R> s

FORWARD RATE AGREEMENT

3x6 6x9 9x12 3M

interb

ank Czech Rep < 0.97 1.1 1.26

PRIBOR=> Hungary < 0.07 0.12 0.195 0.02

BUBOR=> Poland < 1.77 1.79 1.87 1.72

WIBOR=> Note: FRA are for quotes ask

prices *********************************************************** (Reporting by Reuters bureaus, writing by Marcin Goettig; editing by John Stonestreet)

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