CEE MARKETS-Trade war fears halt currency rebound
(In paragraph 4, please read Romanian stocks set six-month lows instead of highs) * Global trade war fears stoke market jitters * CEE FX recovery, dollar losing allure -Reuters polls By Sandor Peto BUDAPEST, July 6 (Reuters) - Central European currencies and some regional stock markets fell on Friday, bringing the week's rebound to an end after the United States slapped tariffs on some Chinese goods.
Fears of an escalating global trade war sent currencies down 0.1-0.2 percent against the euro by 0925 GMT, except for the firming dinar.
Assets in the region have been knocked down in the past few months by a rallying dollar and U.S. debt yields, political tension in European Union members Italy and Germany, and fears that a trade war will slow global economic growth.
As the Chinese central bank sought to calm markets this week, a brief rebound in the yuan helped trigger a bounce for the EU's eastern sector, sending Budapest's, Prague's and Warsaw's stock indexes back to mid-June levels, while Romanian stocks set six-month lows.
Those indexes were all off those levels on Friday, except for Prague as Czech markets were shut for the Jan Hus holiday.
"If the (U.S.-Sino) trade war continues, (the Chinese) are likely to weaken it further," one dealer in Hungary said.
The region's major automotive businesses, now growing at about 4 percent annually, are particularly exposed to a full-blown global trade war.
Data from Hungary showing annual industrial output slowed sharply to 0.4 percent in May put extra pressure on the forint. The currency fell 0.2 percent to 324.10 versus the euro, having fallen to record lows above 330 this week. Hungarian government bond prices eased.
"More robust growth can return in the next month as new car models and capacities will step in and last year's base was weak in the second half," Takarekbank analyst Andras Horvath said in a note.
Analysts said investors are eyeing June inflation figures, due on Tuesday, which are seen showing the inflation rising above the middle of the bank's 2-4 percent target. That was adding to pressure on the forint.
A Reuters poll of analysts published on Friday projected a recovery in the forint, and some analysts did not rule out the National Bank of Hungary launching some policy tightening measures this year.
A separate Reuters poll showed that the recent months-long dollar rally could slow by next year.
CEE SNAPSHOT AT MARKETS 1125 CET CURRENCI ES Latest Previous Daily Change bid close change in 2018 Czech Hungary Polish Romanian Croatian Serbian Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2018 Prague 1077.56 1077.560 +0.00% -0.06% 0 Budapest 36237.73 36335.09 -0.27% -7.97% Warsaw 2160.99 2156.59 +0.20% -12.20% Bucharest 7843.49 7814.50 +0.37% +1.16% Ljubljana Zagreb 1800.78 1799.80 +0.05% -2.28% Belgrade Sofia 631.06 629.51 +0.25% -6.85% 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 1.40 1.60 1.74 1.17 (PRIBOR= ) Hungary 0.67 0.90 1.16 0.30 Poland 1.75 1.80 1.85 1.70 Note: FRA are for ask prices quotes ************************************************* ************* (Editing by Louise Ireland)
