CEE MARKETS-Hungary's forint hits record low, stocks weaken

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BUCHAREST, July 5 (Reuters) - Central European shares tracked European indexes lower on Tuesday, driven by increasing concerns of recession, while the Hungarian forint hit a record low against the euro. Elsewhere in the region, Polish and Romanian central bankers are expected to hike their benchmark interest rates this week, but their currencies were little moved. By 0950 GMT, blue chip indexes in Budapest and Warsaw were each down 1.0% on the day, while Bucharest's fell 0.8%. The forint traded at 406.0000 per euro, a record low and down 0.9% on the day. The Polish zloty was 0.7% weaker, while the Romanian leu, tightly controlled by the central bank, was flat. "The firming of the dollar puts pressure on the forint, while some market players could be trying to push the central bank towards raising its one-week deposit rate by more than 30 basis points on Thursday by weakening the forint," an FX trader in Budapest said. "This means that the forint could keep easing until Thursday." The bank uses the one-week deposit rate to tackle short-term market volatility and sets the interest rate every Thursday. Last week, it raised its base rate by 185 basis points and its one-week deposit rate by 50 basis points, bringing both rates to 7.75%. The forint is central Europe's worst performer so far this year, losing more than 9% versus the euro, kept down by soaring inflation, negative real interest rates and a lack of agreement between the Hungarian government and Brussels over the release of EU funds. In Romania, policymakers are expected to hike the key rate by 75 basis point to 4.50% on Wednesday, still the lowest among its regional peers. However, BCR bank said in a research note tight liquidity control kept market rates elevated which led to "tighter monetary conditions than suggested by the key rate". Polish central bankers are also expected to hike by 75 basis points on Thursday. "The zloty remains under moderate pressure from the external environment," Bank Millennium said in a note. "Waiting for the outcome of Thursday's meeting of the Monetary Policy Council and the Friday conference of the President of the National Bank of Poland prevent the zloty from weakening more." "A 75bp rate hike consistent with the consensus would be relatively neutral for the zloty valuation." CEE SNAPSHO AT MARKETS T 1211 CET CURRENC IES Latest Previou Daily Change s bid close change in 2022 Czech Hungary 0 0 Polish Romanian Croatian Serbian 0 0 Note: calculated from 1800 daily CET change Latest Previou Daily Change s close change in 2022 Prague 1212.59 1212.59 +0.00% #VALUE! 00 Budapest 39398.8 39707.1 -0.78% -22.32% 3 9 Warsaw 1678.69 1693.10 -0.85% -25.95% Buchares 12252.4 12368.8 -0.94% -6.19% t 9 3 Ljubljan <.SBITOP 1117.33 1118.21 -0.08% -11.00% a > Zagreb 1999.29 2003.01 -0.19% -3.85% Belgrade <.BELEX1 838.01 838.45 -0.05% +2.10% 5> Sofia 610.32 609.24 +0.18% -3.99% Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year s 5-year s s Poland 2-year s 5-year s s FORWARD 3x6 6x9 9x12 3M interba nk Czech 7.51 7.42 6.80 7.23 Rep Hungary 10.79 10.89 10.95 8.51 Poland 7.97 8.02 7.81 7.08 Note: are for ask FRA prices quotes ********************************************* ***************** (Reporting by Luiza Ilie in Bucharest, Anita Komuves in Budapest and Pawel Florkiewicz in Warsaw; Editing by Barbara Lewis)

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