CEE MARKETS-FX eases as Hungarian, Czech CPI jumps; Polish FX loan ruling in focus

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By Anita Komuves BUDAPEST, May 11 (Reuters) - Central European currencies and stocks weakened on Tuesday as the Czech Republic and Hungary reported higher-than-expected inflation and markets were looking ahead to a key Polish Supreme Court decision on FX loan mortgages. "Today could bring bigger moves on the currency market as investors react to CPI data and the upcoming Polish ruling," a Budapest-based FX trader said. "The sell-off in stocks is also making the market unstable." Stocks in the region retreated, tracking a fall in European markets and a sell-off in U.S. stocks on Monday which was prompted by rising inflation fears. Budapest was 1.17% lower, while Prague slid 0.63% and Warsaw lost 0.78%. The Hungarian forint and the Czech crown slid after both countries reported CPI above the top end of their central banks' target ranges. The forint was 0.24% lower and trading at 358.70 per euro as inflation in April jumped to 5.1% year-on-year. The Hungarian central bank's tax-adjusted core inflation gauge was steady at an annual 3.1%. The Hungarian central bank left interest rates unchanged in April and pledged to prevent any sustained rise in inflation as the economy recovers and said that it considered the expected jump in inflation temporary. The crown eased 0.14% to 25.600 per euro as Czech CPI accelerated to 3.1 year-on-year in April. "Today's result indicates a growing likelihood of an earlier rise in interest rates," Michal Brozka, an economist at KB, wrote. Market bets on a rate hike as soon as August have jumped since last Thursday's Czech policy meeting after which Governor Jiri Rusnok said a rate rise this year was a certainty. The Polish zloty slid 0.12% and was trading at 4.5625 per euro, ahead of a decision later in the day from the Supreme Court on the issue of Swiss franc mortgages. A ruling last Friday that set the stage for Tuesday's decision calmed markets, thus "market positioning is pretty neutral," said Piotr Poplawski, a senior economist at ING. CEE SNAPSHO AT MARKETS T 1057 CET CURRENC IES Latest Previous Daily Change bid close change in 2021 EURCZK= Czech EURHUF= Hungary 0 EURPLN= Polish EURRON= Romania EURHRK= Croatia EURRSD= Serbian 0 Note: calculated from 1800 daily CET change Latest Previous Daily Change close change in 2021 .PX Prague 1104.93 1111.920 -0.63% +7.57% 0 .BUX Budapes 44067.0 44587.59 -1.17% +4.65% t 9 .WIG20 Warsaw 2099.20 2115.70 -0.78% +5.81% .BETI Buchare 11646.0 11669.02 -0.20% +18.77 st 5 % .SBITOP Ljublja <.SBITOP 1067.75 1072.56 -0.45% +18.53 na > % .CRBEX Zagreb 1955.66 1959.58 -0.20% +12.44 % .BELEX1 Belgrad <.BELEX1 755.65 755.32 +0.04% +0.94% 5 e 5> .SOFIX Sofia 519.18 519.87 -0.13% +16.01 % Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republi c CZ2YT=R s CZ5YT=R s CZ10YT= s Poland PL2YT=R s PL5YT=R s PL10YT= s FORWARD 3x6 6x9 9x12 3M interba nk Czech 0.62 0.95 1.28 0.36 Rep Hungary 0.96 1.13 1.30 0.79 Poland 0.29 0.36 0.46 0.21 Note: are for ask FRA prices quotes ********************************************* ***************** (Additional reporting by Alan Charlish in Warsaw and Robert Muller in Prague; Editing by Subhranshu Sahu)

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