CEE MARKETS-Investors look for direction after Hungary cbank action

    By Anita Komuves
    April 8 (Reuters) - Central European currencies eased and
stock indexes lacked direction on Wednesday as the risk-on mood
in markets fuelled by the slowing spread of the coronavirus
appeared to lose steam.
    The Czech crown, the Polish zloty and
the Hungarian forint were all down about 0.1% at 0817
GMT. The Hungarian forint traded at 357.90 versus the euro,
following a 2% jump on Tuesday.
    The currency strengthened after the central bank
unexpectedly raised its collateralised loan rates, both to 1.85%
from 0.9%, on Tuesday and began a bond-buying programme along
with a massive lending programme for companies to support the
coronavirus-stricken economy. The bank kept its base rate and
overnight deposit rate unchanged.
    Deputy Governor Marton Nagy said the National Bank of
Hungary's (NBH) steps could lead to a flattening of the yield
    "Yields on all tenors are up 2 or 3 basis points today, but
I think that is not connected to the NBH's announcements and it
is not specific to Hungary" an FI dealer in Budapest said. 
    "We see a bit of a risk-off mood in Europe after the failed
deal on eurobonds last night," he added, referring to a
breakdown in EU negotiations over a coronavirus-rescue package
late Tuesday.
    The NBH's action goes along with a government push that will
cause the budget deficit to swell to 2.7% of gross domestic
product this year from a targeted 1%. Prime Minister Viktor
Orban said on Monday the stimulus, which includes subsidised
loans to Hungarian companies and funds to preserve jobs, would
amount to 18%-20% of GDP, including central bank programmes.
    The Polish central bank holds its rate-setting meeting later
today. The National Bank of Poland (NBP) cut its base rate by 50
basis points in March. 
    "Because of increased pressure on exchange rates in CEE,
which recently forced the Hungarian central bank to hike rates,
this meeting could now pass without any action by NBP," Tatha
Ghose of Commerzbank wrote in a note.
    The Czech and the Romanian central banks have also cut rates
recently in response to the economic crisis caused by the
    The Czech finance ministry holds an unscheduled bond auction
later today. The ministry announced the auction on Monday as it
ramps up borrowing.
    "We expect a solid demand ... as cash holders look into
switching from short term deposits to longer term elevated ASW
(asset swap) yielding government bonds," said Komercni Banka
trader Dalimil Vyskovsky in a client note. 
    "Though it is probably not sustainable to have more than 100
billion CZK demanded in every auction," he added. 
    Stock indexes in the region were mixed. Budapest's equities
 gained more than 2%, while Warsaw's stocks were
up 0.8%. Prague's blue chip index was little moved and
Bucharest was down 0.8%.
            CEE        SNAPSHOT    AT                         
            MARKETS               1017 CET            
                       Latest     Previous  Daily     Change
                       bid        close     change    in 2020
 Czech                   27.2060   27.1800    -0.10%    -6.52%
 Hungary                357.9000  357.5000    -0.11%    -7.48%
 Polish                   4.5400    4.5362    -0.08%    -6.25%
 Romanian                 4.8325    4.8334    +0.02%    -0.91%
 Croatian                 7.6248    7.6298    +0.07%    -2.35%
 Serbian                117.5300  117.5900    +0.05%    +0.03%
 Note:      calculated from                 1800 CET          
                       Latest     Previous  Daily     Change
                                  close     change    in 2020
 Prague                   820.12  820.3300    -0.03%   -26.49%
 Budapest               33423.26  32715.70    +2.16%   -27.47%
 Warsaw                  1615.83   1603.50    +0.77%   -24.85%
 Bucharest               7953.50   8020.15    -0.83%   -20.28%
 Ljubljana                780.59    780.83    -0.03%   -15.69%
 Zagreb                  1568.89   1596.93    -1.76%   -22.23%
 Belgrade   <.BELEX15     673.30    672.38    +0.14%   -16.01%
 Sofia                    433.24    433.39    -0.03%   -23.74%
                       Yield      Yield     Spread    Daily
                       (bid)      change    vs Bund   change
 Czech                                                spread
   2-year   <CZ2YT=RR     0.9470    0.0000   +156bps     +1bps
   5-year   <CZ5YT=RR     1.1520    0.0430   +171bps     +7bps
   10-year  <CZ10YT=R     1.4540    0.0680   +180bps    +10bps
   2-year   <PL2YT=RR     0.9810   -0.1820   +160bps    -17bps
   5-year   <PL5YT=RR     1.2780    0.0000   +184bps     +2bps
   10-year  <PL10YT=R     1.6220    0.0080   +196bps     +4bps
                       3x6        6x9       9x12      3M
 Czech Rep          <       0.36      0.38      0.46      1.01
 Hungary            <       1.78      1.82      1.85      0.92
 Poland             <       0.59      0.46      0.44      1.17
 Note: FRA  are for ask prices                                
 (Additional reporting by Jason Hovet in Prague; Editing by Mark

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