CEE MARKETS-Forint retreats from 11-month high on Brexit, Fidesz worries
* Forint falls from 11-month high on Brexit, Fidesz fears * Crown eases as rate hike bets are reduced * Poland releases robust industrial output data, zloty firms * Romanian minister pledges lower bank tax, stocks rise (Recasts with forint retreat, concerns over Brexit and Hungarian ruling party, new comments) By Sandor Peto BUDAPEST, March 20 (Reuters) - The forint sharply reversed a rise to 11-month highs against the euro on Wednesday, reflecting concerns of Britain quitting the European Union without a deal and of Hungary's ruling party Fidesz leaving the bloc's centre-right parliamentary grouping.
The forint traded at 313.8 by 1356 GMT against the euro, shedding 0.3 percent in its biggest daily drop for weeks.
In early trade it set an 11-month high at 312.65, due to expectations for dovish comments from the Federal Reserve later in the day and monetary tightening by the Hungarian central bank next week. But it subsequently suffered a sharp reversal.
Hungarian Prime Minister Viktor Orban's chief of staff said the ruling Fidesz party would quit the European People's Party, a European conservative parliamentary grouping, if the latter suspends the membership of Fidesz at a meeting on Wednesday.
Coupled with the latest Brexit concerns the threat of a European parliamentary dispute created an uncertain backdrop for the forint.
The Czech crown eased 0.1 percent to 25.655 versus the euro, as bets for a Czech central bank rate hike on March 28, a day before the official date of Brexit, diminished.
Morten Lund, an analyst with Nordea Markets, said the crown was the most vulnerable currency in the region to any bad news about Britain's exit from the EU.
"In terms of exports and value-added it is Poland which has the highest share, but when you dig into sector compositions, the Czech Republic, they are vulnerable," Lund said.
The zloty did not track the forint's retreat and traded at 4.2839 against the euro, up 0.1 percent and only a shade off its early six-week high.
After releasing robust wage growth figures on Tuesday, Poland's statistics office reported a surprise pick-up in annual industrial output growth in February on Wednesday.
"Slowdown seems to be nowhere close," Erste analyst Katarzyna Rzentarzewska said in a note, adding that inflation pressures remain limited despite a rise in the February annual producer price index to 2.9 percent.
KBC analysts said the Polish economy, buoyed by strong consumer spending, decoupled from its slowing neighbours, Germany and the Czech Republic, and February retail sales figures due on Thursday may confirm that.
Central European stocks tracked a retreat of German shares from five-month highs.
But Bucharest's blue-chip index gained 1.3 percent.
Rising 9 percent so far this year, it is the region's best performer in 2019 as it has partially recovered from a plunge in December when the Romanian government announced new taxes on various sectors including banks.
Finance minister Eugen Teodorovici said on Wednesday that the bank tax could be lowered.
CEE SNAPSHOT AT MARKETS 1456 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech Hungary Polish Romanian Croatian Serbian Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1069.92 1075.360 -0.51% +8.45% 0 Budapest 41696.01 42014.16 -0.76% +6.53% Warsaw 2346.94 2352.42 -0.23% +3.09% Bucharest 8051.99 7947.65 +1.31% +9.05% Ljubljana Zagreb 1789.00 1777.03 +0.67% +2.30% Belgrade Sofia 588.88 600.40 -1.92% -0.94% 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 2.16 2.22 2.25 2.03 (PRIBOR= ) Hungary 0.33 0.49 0.67 0.14 Poland 1.74 1.74 1.74 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Additional reporting by Aaron Jude Saldanha in Bangalore Editing by Alison Williams and David Holmes)
