Stocks rise, forint and crown trade near multi-month highs

BUDAPEST/BUCHAREST: Central European stocks mostly firmed on Monday as strong US jobs data released on Friday increased risk aversion in global markets while the region's currency markets remained cautious.

Although Warsaw led the region's mild equity gains, with its blue-chip index rising by 0.8 percent by 0947 GMT, the zloty led losses, shedding a quarter of a percent.

Trading at 4.2985 versus the euro, it was still not weaker than its 90-day moving average.

The Czech crown touched a 3-1/2-month high before retreating to 25.566 versus the euro, flat from Friday, while the forint retreated from the brink of 5-month highs beyond 320.8, and traded at 321.17.

Data released by Hungary on Monday showed a slight slowdown in the annual growth of retail sales to 5.2 percent in November.

But wages continue to surge as the region's labour markets are tight, probably boosting imports and nudging short-term interbank interest rates higher this year, analysts said.

Czech interest rates should continue to rise until there is a clear view of a recession risk or signs that inflation is tamed, hawkish central bank (CNB) board member Ales Michl said in daily Mlada Fronta Dnes on Monday.

Even before the CNB's February meeting, Romania and Poland's central banks will decide on interest rates this week and both are expected to keep them on hold.

Romanian central bank board member Daniel Daianu said on the bank's blog on Sunday that the tax on commercial banks' assets, launched by the government last month to help rein in a rise in the budget deficit, constrains monetary policy.

Further comments from Governor Mugur Isarescu, whose term will expire this year, will be closely watched on Tuesday.

The leu traded a touch weaker, at 4.6633 against the euro, but Bucharest's stock index rose slightly, extending this year's gains to 4 percent.

At 7,678 points, the index was still about 1,000 points below early December levels before a plunge after the government announced its tax plans for 2019, which hit several business sectors, including banks.

In the region's government bond markets, Poland's 10-year yield dropped 4 basis points to 2.76 percent, after a 7 basis point rise on Friday, tracking a rebound in US yields.

Hungary's corresponding yield stayed near Friday's increased levels, at 2.89 percent.