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CEE MARKETS-Stock rally continues, Bucharest index sets 9-year high

* Bucharest stocks at 9-year high, Banca Transilvania record high * Budapest shares set record high again, driven by OTP Bank * Warsaw stocks hits 18-month high, Prague highest since Dec 2015 * Czech stocks shrug off plan for higher tax for big companies (Adds Czech tax plan, forint rise) By Sandor Peto BUDAPEST, Feb 21 (Reuters) - Bucharest stocks hit a 9-year high on Tuesday, driven by surging Banca Transilvania as bank stocks fuelled a rally in Central European equities markets.

The region's stocks have tracked the gains in global equities as U.S. President Donald Trump has pledged domestic economic stimulus. The rally lost momentum in the past week, but regained traction on Tuesday.

Warsaw well outperformed Western Europe's main markets. Rising 2.3 percent by 1419 GMT, it set a new 18-month highs.

Budapest, which has been moving in record-high territory since November, set another record, rising 0.7 percent, with OTP Bank shares gaining 0.9 percent.

Bucharest rose 1.3 percent to its highest levels since June 2008.

It was driven by the gains of OMV Petrom, the unit of Austrian oil group OMV, and Banca Transilvania whose shares hit a record high, rising 2.1 percent.

Petrom reported profits for 2016 last week, after a loss in 2015.

Banca Transilvania shares have been rising since it reported its results last week. Net profits fell last year after a one-off surge in 2015, but other indicators, including the ratio of non-performing loans, improved.

Romania's banking sector profits mildly dropped last year to 4.2 billion lei ($981.19 million), but the negative impact of two bills launched last year, including one on the conversion of Swiss franc loans, will be less than expected, Raiffeisen analyst Silvia Rosca said.

Banks' prospects have improved across the region.

Hungary cut its bank tax last year. Poland's ruling party has softened its unfriendly rhetoric over banks and some investors speculate that a rise in Polish interest rates expected for 2018 could lift bank revenues.

In contrast, the ruling Czech Social Democrats put a proposal for a special tax on banks on its election campaign agenda earlier this month.

On Tuesday, they announced an additional plan to raise taxes on the 600 companies that make over 100 million crowns' pre-tax profit, to finance tax cuts for smaller firms.

But it is uncertain whether the Social Democrats can win the October elections, or gather sufficient support for these plans as they do not lead opinion polls.

Czech stocks shrugged off the tax plans. Prague underperformed regional peers, but firming about 0.2 percent it touched a 15-month high.

In currency markets, the forint gained 0.3 percent against the euro and set a 5-week high at 306.9.

CEE SNAPS AT 1519 MARKETS HOT CET CURRENCIES Lates Previ Daily Chang t ous e bid close chang in e 2017 Czech crown 27.02 27.02 +0.0 -0.05 00 20 1% % Hungary 307.0 308.0 +0.3 0.59% forint 000 700 5% Polish 4.307 4.314 +0.1 2.25% zloty 0 8 8% Romanian 4.515 4.522 +0.1 0.43% leu 5 1 5% Croatian 7.452 7.448 -0.05 1.38% kuna 0 5 % Serbian 123.7 123.8 +0.0 -0.35 dinar 800 100 2% % Note: daily calculate previ close 1800 change d from ous at CET STOCK S Lates Previ Daily Chang t ous e close chang in e 2017 Prague 975.0 973.3 +0.1 +5.7 1 2 7% 9% Budapest 34209 33973 +0.6 +6.8 .33 .59 9% 9% Warsaw 2243. 2192. +2.2 +15.

06 79 9% 15% Bucharest 7898. 7796. +1.3 +11.

30 14 1% 48% Ljubljana 765.6 764.1 +0.1 +6.7 5 7 9% 0% Zagreb 2222. 2222. -0.01 +11.

70 97 % 42% Belgrade 1 1 3% % Sofia 610.8 608.2 +0.4 +4.1 4 8 2% 6% BONDS Yield Yield Sprea Daily d (bid) chang vs chang e Bund e in Czech sprea Republic d 2-year 3 7 bps 5-year bps s 10-year bps s Poland 2-year bps s 5-year bps s 10-year bps s FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M inter bank Czech Rep < 0.27 0.3 0.35 0 PRIBOR=> Hungary < 0.34 0.54 0.68 0.23 BUBOR=> Poland < 1.765 1.81 1.895 1.73 WIBOR=> Note: FRA are for quotes ask prices ************************************************** ************ ($1 = 4.2805 lei) (Additional reporting by Jason Hovet in Prague; Editing by Robin Pomeroy)

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