CEE MARKETS-Hungarian assets firm mildly after S&P upgrade
* S&P upgrade gives some support to Hungarian assets * Persistent Czech growth may strengthen crown-analysts * Romanian officials meet again over disputed bank tax By Sandor Peto BUDAPEST, Feb 18 (Reuters) - The forint and Hungarian government bonds firmed slightly on Monday after Standard & Poor's upgraded the country's sovereign credit rating late on Friday.
The price changes were modest as S&P's upgrade to 'BBB' from 'BBB-' was not a surprise. The main credit rating agencies have lagged the financial markets in their assessment of Hungary's economic prospects, dealers and analysts said.
The forint firmed 0.1 percent to 317.99 against the euro by 0917 GMT, one forint firmer than the past month's average, while other Central European currencies were treading water.
Hungary's government bond yields dropped by 1-2 basis points from Friday. The 10-year paper traded at 2.73 percent, down 2 basis points, while Poland's corresponding yield edged up by 2 basis points to 2.69 percent.
"With the United States closed, activity is low, but when America returns, we may see some further decline in yields," one Budapest-based trader said.
"Yields and swaps are still near the top of the past months' 20-25 basis point range, and a decline of about 10 basis points is on the cards this week," the trader said.
Fitch could also upgrade Hungary from 'BBB-' in a review due on Friday, but "on Eurobond and CDS markets the one notch upgrade looks well priced in," Raiffeisen analyst Gintaras Slizhyus said in a note.
Czech 10-year bonds traded higher by 4 basis points at this year's highest levels at 1.85 percent.
The crown traded flat at 25.697 against the euro, near this month's highs. Faster-than-expected Czech economic growth reflected in fourth-quarter data released last week could boost the crown to 25.3 in the next weeks, the Raiffeisen note said.
The zloty, steady at 4.3309 near last week's 3-and-1/2-month lows, could also get a boost from Polish wages, retail, output and other data due this week, Warsaw-based Santander analysts said.
"After... disappointing headlines for December, we expect some improvement in the majority of domestic releases. This should support the zloty and push yields up slightly," they said in a note.
Central European equities mostly rose as optimism grew in global markets for progress in trade talks between the United States and China.
The positive mood also helped Bucharest stocks continue to regain some ground after a sharp decline in the past two months, with their blue-chip index rising by 1.1 percent.
But worries persist over new taxes on Romanian banks and energy companies launched this year.
Romanian finance ministry and central bank officials are due to hold a new round of talks about the controversial bank tax.
CEE SNAPSHOT AT MARKETS 1017 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech Hungary Polish Romanian Croatian Serbian Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1062.14 1058.230 +0.37% +7.66% 0 Budapest 40445.95 40179.84 +0.66% +3.34% Warsaw 2333.64 2338.20 -0.20% +2.50% Bucharest 7740.37 7657.08 +1.09% +4.83% Ljubljana Zagreb 1764.24 1769.31 -0.29% +0.88% Belgrade Sofia 576.43 577.24 -0.14% -3.03% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year 5-year 10-year Poland 2-year 5-year 10-year FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.08 2.11 2.13 2.01 (PRIBOR= ) Hungary 0.38 0.59 0.79 0.15 Poland 1.73 1.71 1.71 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Reporting by Sandor Peto Editing by Gareth Jones)
